Sen. Elizabeth Warren wants employees to have a seat at the boardroom table — several, in fact.
The average chief executive at the 350 biggest American companies made 17.6 percent more last year than in 2016 ― a huge raise for people already making several million dollars a year.
That’s according to a new analysis by nonpartisan think thank the Economic Policy Institute, which pegged the average compensation for a CEO at a large company at $18.9 million in 2017 ― or 312 times the average worker’s pay. That figure, by contrast, increased by a paltry 0.3 percent.
Executives are so rich they are making other rich people look poor, taking home 5.5 times what the average member of the top 0.1 percent of earners did last year.
“Over the last several decades, CEO pay has grown much faster than profits, the pay of the top 0.1 percent of wage earners, and the wages of college graduates,” EPI’s Lawrence Mishel and Jessica Schieder wrote in their analysis. “CEOs are getting more because of their power to set pay, not because they are more productive or have special talents or more education.”
Sen. Elizabeth Warren (D-Mass.) wants to stop this madness by changing whom corporations actually answer to. This week, Warren proposed legislation, the Accountable Capitalism Act, that would require big companies to sign a charter of corporate citizenship, give employees a vote on corporate boards, and limit the ability of companies to buy back their own stock, a practice that was illegal before 1982. By purchasing their stock on the open market, companies reduce the number of shares outstanding, driving up the value of those that remain ― inflating the wealth of people who own lots of stock, including CEOs. To that point, the EPI analysis noted that stock awards rather than salary were what drove the increase in boss pay.
Corporate executives would be barred from selling any stock they received from the company for at least five years, and would have to wait three years to cash in after a stock buyback.
“We need to end the harmful corporate obsession with maximizing shareholder returns at all costs, which has sucked trillions of dollars away from workers and necessary long-term investments,” Warren said in a press release.
Right now, corporations are like the worst friend you have ever had. They only care about themselves and dump their problems on everyone else. This doctrine goes by the euphemism “shareholder value.” In the 1970s, New Deal-era regulations on a broad swath of corporate behavior began being repealed, reinterpreted or ignored, based on the premise that a competitive market of corporations maximizing their own profits would produce the best possible results for society.
CEOs are probably the only people who could plausibly believe that the world we actually inhabit in 2018 is the best of all possible worlds. And conservative insistence that the economy is actually overregulated and overtaxed flies in the face of what has actually happened since 1978 ― a remarkably steady path of deregulation and tax reduction.
Under Warren’s bill, corporations would have a federal obligation to act in the “general public benefit.” This is in fact a very old idea. When states began chartering corporations in the 1790s, they required corporate founders to show that their firm would fulfill some significant public purpose. In return, the people who started the company would be personally immunized against lawsuits ― aggrieved parties could sue the corporation, but not its owners.
Warren would task a new federal regulator at the Department of Commerce with monitoring corporations. If a corporation engages in egregious lawbreaking, the office could revoke its federal charter if at least one state attorney general petitions to have it rescinded. Absent a federal charter, the company would have to either shrink to doing less than $1 billion in business a year, or shut down operations.
The act would also require big companies to give their workers 40 percent of the seats on the company’s board. Currently, boards are elected by shareholders.