At Green America, we are concerned with wealth inequality and the threat it poses to livelihoods and social justice. A new report from As You Sow shockingly demonstrates just how deep the wealth gap is.
For the past four years, the shareholder advocacy group has released comprehensive annual reports on the 100 Most Overpaid CEOs among the 500 companies in the S&P500 index. Their most recent report, released in February, focuses on “shareholder votes on these pay packages, particularly the votes of large financial managers, mutual funds, and pension funds” and seeks to identify which financial managers are voting against excessive payments and which are simply “rubber stamping” approval.
The highest-paid is Sundar Pichai of Google’s parent company, Alphabet, at $199 million a year. Additionally, Comcast, ExxonMobil and Oracle have been on the list for four consecutive years, as well as five repeats from last year: Chesapeake Energy, Citrix, Discovery Communications, Regeneron Pharmaceuticals, and Wynn Resorts. Companies claim that CEO pay is “performance-based” on short-term goals, yet rewarding CEOs so dramatically emphasizes the impact of a single individual rather than a broader base of knowledgeable employees.
Rosanna Landis Weaver, Program Manager of the CEO Pay Program at As You Sow, says that awareness of excessive CEO pay packages is growing, however, “awareness has not translated into votes. The rubberstamping trend continues, even with evidence showing persistent underdevelopment of the highest paid CEOs.”
Besides shareholders using their proxy vote against exorbitant executive compensation packages, there are techniques businesses can use to prevent and lessen wage disparities. One is developing absolute transparency. Jake Rosenfeld, a sociologist at Washington University in St. Louis, has found that publishing everyone’s pay raises wages.
Another example is having a firm compensation ratio. The most well-recognized is Ben & Jerry’s “social pact that Messrs. Cohen and Greenfield made with their employees at the start of their venture: From top to bottom, the pay ratio between the highest salaried executive and lowest-earning-worker would be no greater than 5 to 1,” according to ABC. This pay scale lasted for 16 years until Cohen retired, at which point the company couldn’t find another replacement that would accept the pay scale, and then disappeared altogether after Unilever acquired the company. Although the compensation ratio is not practiced by Ben & Jerry’s anymore, there are smaller local businesses that utilize this practice.
At the Green Business Network, we certify members for their business’ social and environmental impacts. Businesses in our network address wage disparity when they join us in campaigns to raise the minimum wage and when confronting companies to pay their employees fairly. We work with our members to ensure that they meet and maintain these criteria as leaders of the green economy.