Leno Proposes Publicizing Pension Details for Top Private Sector Execs
by Patch Staff, Patch.com
Feeling the stiff breeze from the brewing pension reform storm, Sen. Mark Leno believes more light needs to be shed on the retirement benefits of top business executives.
Leno’s first-in-the-nation bill would require publicly traded corporations to report the amount of money their top five highest-paid exectuives receive in retirement. The bill will be heard in the Senate Judiciary Committee on Tuesday, April 24.
California law only requires companies to predict how much pension benefits their top five executives will receive, not report what they bring in once they retire. Leno said his bill would help the public better understand how top executives have reaped huge increases in their retirement compensation at a time when pensions for non-management employees have been eliminated or restructured, causing what he called "enormous hardship" on their families and communities.
‘It’s time to shed some light onto how company executives enrich themselves by millions of dollars each year while eliminating pensions for the lower earning workers they have sworn to protect,’ said Leno, who represents Marin in the state Senate.
Corporate CEO pay across America has grown exponentially in recent years just as wages for workers have remained relatively stagnant. The average CEO of a large corporation in 1980 made about 42 times more than the average worker. By 2011, that disparity had grown to 343 times the pay of the average worker.
In actual numbers, average yearly compensation for a top executive at a large corporation in the early 1980s was about $850,000. By 2000, that number escalated to $5.2 million. In 2010, it was estimated at $11.8 million.
Leno said much of the increased pay comes in the form of incentive compensation, which rewards an executive for performance while on the job. Until recently, many companies did not allow incentive pay to be added to an executive’s base salary for the purpose of calculating retirement benefits. Recently, companies have chosen to add incentive compensation to the calculation, exponentially increasing the amount of money executives and their families are paid every year for the rest of their lives.
If approved, Leno’s SB 1208 would be the first law requiring publicly traded companies to report an actual dollar amount of retirement compensation rather than a prediction.
The information will be posted on the Secretary of State’s website, along with current top employee compensation figures. It is sponsored by the Consumer Federation of California and supported by the California Labor Federation, California Nurses Association, California Professional Firefighters Association and California School Employees Association AFL-CIO.
‘Financial commitments made to top corporate executives when they retire are not just one-time payments, they literally continue for a lifetime,’ said Richard Holober, executive director of the Consumer Federation of California. ‘This bill arms shareholders and consumers with critical information that will shed light on whether huge increases in executive retirement compensation at corporations across America are truly warranted and sustainable. SB 1208 will bring sunshine into an area that badly needs it,’ he said.
If passed by the committee, Leno’s would move on to Senate Appropriations in May.