Executive pay at the nation's largest corporations has more than quadrupled since the 1970s. In light of steeply rising income disparity in the U.S., extravagant CEO pay remains intensely unpopular, and presents significant material and reputational risks for firms. This is particularly true in financial institutions where excessive pay is seen to incentivize excessive risk-taking.
While expanded reporting of executive compensation is mandatory under Dodd-Frank, more comprehensive public disclosures around the structuring of pay packages is sought by investors as a question of good corporate governance. ICCR members call for executive pay formulas that reconcile compensation with specific performance metrics including ESG performance and that align more appropriately with the salaries of average employees.
Featured ICCR Initiative
CEO to Worker Pay Gap at TJX. Many S&P 500 CEOs are overpaid in comparison to the pay of CEOs of large complex European, Canadian, Australian, and Japanese companies, and far out of proportion to the value they provide. ICCR is concerned that a large gap between executive compensation and that of average employees puts companies' reputation, human capital, and shareholder value at risk. Reputational risk is particularly acute as Americans pay more attention to the broad social effects of economic inequality. It is now widely cited that the richest one percent hold as much as 40 percent of America’s wealth, and their incomes continue to grow. This coincides with a widening of the gap between what firms pay top executives and what they pay average workers.
This year, ICCR members filed a 'pay gap' resolution at TJX. Read their argument for why action is needed.