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The San Jose Mercury News reports that some boards of publicly traded companies in Silicon Valley appear to have become more sensitive to shareholder concerns about runaway CEO compensation, apparently in reaction to a provisions in the Dodd-Frank Wall Street Reform Act of 2010. Two of these provisions, which apply to publicly traded companies, are 1) "say on pay": a requirement that a non-binding shareholder vote approving or disapproving of the CEO's compensation, be held at least once every three years; and 2) "CEO pay multiple": a requirement that the firm disclose the ratio of total compensation of the CEO to that of the firm's median employee salary or wage.
It's important to realize that shareholder votes are based on one share, one vote (rather than one person, one vote); the big shareholders, which tend to be deep-pocketed institutions such as mutual funds and pension funds, dominate the proceedings.
Oracle, biotech company Gilead Sciences, and pharmaceutical distributor McKesson, were mentioned by Mercury News as examples of companies based in Silicon Valley whose CEOs have taken pay cuts in the last year. McKesson's CEO lost the non-binding shareholder vote after Glenn Gray, a warehouse worker who made $16/hr, stood up at the shareholder's meeting to contrast the CEO's compensation with those of rank-and-file workers struggling to make ends meet. Gray was subsequently fired, but his job was later reinstated under court order. He says he has no regrets about speaking out:
My objective was not to tell shareholders [McKesson CEO] John Hammergren deserves this or that. I was speaking for the employees back on the plant who were afraid. You've got some really, really struggling people in Florida.
Recent "say on pay" shareholder votes at Salesforce and Yahoo! also attracted attention, but the dissidents opposing the CEO pay packages failed to win the majority of votes cast.
(Score: 4, Insightful) by Thexalon on Monday August 03 2015, @04:26PM
The problem is that the people who are setting CEO salaries are all members of a "big club" (as George Carlin aptly put it), representing a very small number of rich individuals and staggeringly rich financial companies. The rich individuals mostly got rich by being C-level corporate executives, and C-level corporate pay scales are highly driven by the pay of people in other companies in the same position, so they have strong motivations to keep C-level corporate pay as high as possible to keep their own salaries high. The staggeringly rich financial companies are of course owned and managed by people in the same "big club", so their representatives naturally have the exact same motivations. And the people in the "big club" control a majority of the shares of just about every publicly traded corporation.
And that's even ignoring the basic quid pro quo of "You vote for my big raise, I'll vote for yours," which I'm sure happens all the time as well.
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 0) by Anonymous Coward on Monday August 03 2015, @06:45PM
A recent illustration of the issue:
Like-minded friends get hired [dilbert.com]
Followed by
Too much truth [dilbert.com]
-- gewg_