Portland, OR to vote on fining CEOs for excessive pay
- Portland, OR, will be the first U.S. city to hold pay disparities between CEOs and their employees in check if their vote on the proposal passes. The city will fine company heads an extra 10% in municipal fines if they earn 100 times or more than their workers’ median pay, reports Namely, a payroll and employee benefits firm.
- A 2016 Economic Institute Policy study shows that CEO pay is 276 times the average employee’s. The disparity has grown three times larger in the past 20 years and 10 times larger in the last three decades. EIP notes that as the stock market recovered and company profits grew in 2012, workers’ wages have stagnated.
- Portland’s city council is expected to vote on the pay disparity ordinance in December. If approved, the measure could generate $3.5 million a year in revenue for the city. Citing former Secretary of Labor Robert Reich as a source, Namely reports that the San Francisco is holding a hearing on a similar ordinance in December.
The Securities and Exchange Commission has mandated public disclosure of CEOs’ salaries since 2015. As a result, more employees are aware of the disparity between their pay and their company’s top executive. While cities such as Portland and San Francisco vote on ordinances to stem growing wage gaps, HR can review compensation reports to find out if their company’s pay grades are at least competitive.
These ordinances may put more pressure on companies over the upcoming pay ratio rule, though the SEC did recently clarify how median employee pay could be calculated.