September 17, Washington, D.C. — The Institute for Policy Studies today called on the Securities and Exchange Commission to end a 37-month stall and finally enact a clear, no-nonsense rule that requires corporations to reveal the ratio between their CEO and median worker compensation. SEC officials will consider whether to propose rules for implementing this law at their open meeting this Wednesday.

The Dodd-Frank Wall Street Reform and Consumer Protection Act enacted in July 2010 includes a provision — known technically as Section 953(b) — that mandates CEO-worker pay disclosure on an annual basis. But fierce corporate hostility has totally bogged down the SEC rule-making process.

“The SEC really has no policy excuse for this delay,” says Sarah Anderson, the Institute’s lead author on its annual Executive Excess reports. “The agency has wasted away three years on this.”

Actually, she adds, the SEC has wasted away well over three decades. Expert observers of the corporate compensation scene have been calling for action around CEO-worker pay ratios ever since Peter Drucker, the founder of modern management science, called for a 25-to-1 ratio between top management and worker pay in a 1977 Wall Street Journal op-ed.

Back at that time pay ratios of 50- and 100-to-1 struck the American public — and experts like Drucker — as totally unjustifiable. Ratios that wide, Drucker wrote, endanger the great business achievement of the 20th century, “the steady narrowing of the income gap between the ‘big boss’ and the ‘working man.’”

That achievement has now gone completely by the boards. Over recent decades, the CEO-worker pay gap has soared. Major corporate CEOs last year took in 354 times more compensation than average American workers, double the gap in the early 1990s. A Bloomberg News survey this past spring found that CEOs at eight major U.S. corporations were making over 1,000 times the average pay of workers in their industry.

“Gaps this outrageous won’t end until investors, consumers, and workers have specific information about how CEO-worker pay ratios vary from one corporation to another,” says Sam Pizzigati, another IPS executive compensation expert. “Unless the SEC bows to corporate pressure to water down the rules, the disclosure required by 953(b) would deliver this specificity.”

Corporate lobby groups are pressing regulators for numerous exemptions, including the exclusion of part-time and foreign-based workers. As the Institute explained in SEC comments submitted in 2011, “The disparity between U.S. and global employee compensation is relevant for shareholders to understand the widespread trend of moving operations outside the United States. And in a globalized labor pool, the effects of extreme pay gaps are just as poisonous in foreign workplaces as they are in the United States.” Numerous studies indicate that extreme pay gaps undermine worker morale and productivity.

With strong pay ratio disclosure rules in effect, IPS analyst Scott Klinger notes, shareholders could cast more informed “say on pay” votes at corporate annual meetings. Lawmakers could also build upon this information and put in place legislation that denies tax breaks and government contracts to corporations that compensate their top executives above a reasonable ratio.

“Pay ratio disclosure,” sums up Anderson, “could be a game-changer in the struggle against over-the-top executive compensation. That’s why, of course, corporate chiefs and flacks have spent the last three years lobbying so hard to kill it.”

IPS executive compensation experts available for comment:

Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies and has co-authored20 IPS annual reports on executive compensation. Contact:, 202 787-5227 (office) or 202 299 4531 (cell).

Sam Pizzigati, an IPS associate fellow, is the author of the The Rich Don’t Always Win: The forgotten triumph over plutocracy that created the American middle class, 1900-1970 (Seven Stories Press). He also edits Too Much, an online weekly newsletter on excess and inequality.

Scott Klinger, an Institute for Policy Studies associate fellow, crafted the first shareholder proposals on executive pay while working as a social investment portfolio manager. He has also written extensively on corporate tax avoidance. Scott is a CFA charterholder. Contact:

Institute for Policy Studies ( has conducted path-breaking research on executive compensation for 20 years. The 2013 edition of their annual Executive Excess report received significant media coverage, including inMarketWatch, the Los Angeles Times, and the Wall Street Journal.

IPS Media Director: Lacy MacAuley, Institute for Policy Studies, (202) 445-4692 main, (202) 234-9382 second,

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