Statements On Introduced Bills And Joint Resolutions
Floor Speech
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By Mr. DURBIN:
S. 1006. A bill to require a supermajority shareholder vote to approve excessive compensation of any employee of a publicly-traded company; to the Committee on Banking, Housing, and Urban Affairs.
Mr. DURBIN. Mr. President, Americans have every right to be outraged over the recent bonuses given to employees of the group within AIG that led to that company's collapse. American taxpayers have provided $185 billion--and counting--to save a firm that has been deemed ``too interconnected to fail.''
It is unacceptable that millions of those taxpayer dollars have been handed over to some of the executives who caused this disaster in the first place. If there is a constitutional way to reclaim those bonuses, I support it.
But it is important to remember that executive compensation practices have been out of control for many years. While the wages and benefits of middle class workers have stagnated, CEO compensation has exploded.
According to the Economic Policy Institute's ``State of Working America,'' in 1965 U.S. CEOs at major companies made 24 times the pay of an average worker. By 2005, CEOs earned 262 times the pay of an average worker.
The comparison between CEOs and minimum wage workers is even starker. In 1965 U.S. CEOs at major companies made 51 times the pay of workers earning the minimum wage. By 2005, CEOs earned 821 times the pay of workers earning the minimum wage.
These comparisons are important not because they could be used to incite calls for class warfare, but because the American people deserve an honest accounting of the activities of the corporations that touch their lives in so many ways. Every American deserves an honest wage for honest work. And every American, from the top of the corporate ladder to the bottom, deserves to know whether they are being compensated fairly--whether they are sharing in the rewards of the company's work or whether their labors are mainly fueling ever more extravagant pay for the top executives.
We have lost the balance we once had in America. Executive pay has soared, while pay for many s has not even kept pace with their productivity increases. It's not surprising that there is widespread fury when CEOs get it wrong. After all, they have a hand in setting their own salaries. But recently, the anger of the average American worker has boiled over because so many CEOs have gotten it so wrong. That outcome is not healthy for our economy, and it's not healthy for our society.
If companies want to pay their executives handsomely for excellent performance, they should be able to do that. They should be able to compete for top talent. But the shareholders should be looking over their shoulders as they adopt excessive pay structures, and the taxpayers shouldn't be subsidizing the resulting income disparities.
To restore some balance, the shareholders of a corporation should have to approve lucrative compensation packages. And, the companies shouldn't receive a tax deduction for handing out excessive pay.
That is why today I am introducing two bills--the Excessive Pay Shareholder Approval Act S. 1006, and the Excessive Pay Capped Deduction Act, S. 1007.
The Excessive Pay Shareholder Approval Act would require a supermajority--60 percent--vote of the shareholders to approve a compensation structure in which any employee receives more than 100 times more than the average employee of that company. Corporations could pay executives whatever they think is appropriate, but shareholders would have to OK packages that are 100 times as large as the average worker earns. This bill would require greater transparency in compensation and would encourage companies to think about how they pay their lower-paid workers, not just how they reward the people at the top.
Similarly, the Excessive Pay Capped Deduction Act would limit the normal tax deduction for compensation for executives to 100 times the compensation of the average worker at that company. Again, corporations could pay executives whatever they decide is appropriate, but they could not claim limitless tax benefits for doing so. This bill also would encourage companies to look at their entire compensation structure, and it would protect taxpayers.
Here is an example. If the average worker at a company earned, including wages, paid leave, supplemental pay, and retirement, the same amount as the average worker nationwide in December of 2008, that worker would have earned around $50,000. At that company, a supermajority of shareholders would be required to approve pay packages larger than $5 million and that company could not deduct compensation in excess of $5 million.
How many companies would this affect? According to the research firm The Corporate Library, in 2007 the median compensation for CEOs of S&P 500 companies was $8.8 million. Therefore, if these companies are only paying average wages across the rest of the company, many of them would be affected by this legislation. Many would not.
From our founding, this country has benefitted from a sense of unity and balance that has brought Americans together in good times and in bad. If the rewards handed out by our leading corporations flow excessively to the very wealthy while leaving middle-class families behind, we risk losing that sense of common purpose. The uproar over AIG bonuses showed very clearly the corrosive effects of compensation packages that appear to be disconnected from the reality that the average family faces day in and day out.
The two bills I am introducing today would help to restore some of the balance we have lost, by ensuring greater accountability for the disparities in compensation for corporate leaders and the average workers they employ, and by protecting taxpayers when a company's compensation packages reach extreme levels.
I urge my colleagues to support both bills.
Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.
There being no objection, the text of the bill was ordered to be printed in the Record
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