Greenlining Institute has taken a lead role among nonprofits representing the 70% of Americans who live from paycheck to paycheck in raising questions about excessive executive compensation. Each year, CEO compensation increases by 10% or more while median family income has declined over the last five years by 5.9%.

Two years ago, Greenlining Institute reached an agreement with PG&E that required the highest level in the nation of corporate transparency for executive compensation. All PG&E officer compensation, whether received or deferred, had to be reported in a simple verified form and had to include not just the top 5 officers required by the U.S. Securities and Exchange Commission, but all officers.

Recently, the California Public Utilities Commission ordered So Cal Edison, at Greenlining’s request, to follow the PG&E model and, in addition, be the first corporation in the nation to fully report major severance and retirement packages, which often amount to millions of dollars in unreported income.

Presently, the CPUC has, partly at the request of Greenlining, taken the national lead in investigating the impact of excessive executive compensation on ratepayers. Going far beyond SEC requirements, Greenlining has raised the following in the investigation:

  1. All officer compensation must be reported in a simple fashion.
  2. Officer compensation must be made available to ratepayers on an annual basis and in merger proceedings to enable the public to be fully informed.
  3. To highlight the size of CEO compensation, the CEO must also set forth the median salary of non-mangement workers at his/her company and must report the dollar amount of corporate philanthropy to the poor.

The Wall Street Journal and Fortune Magazine report that CEO compensation is often 400 times that of the average workers salary. The CEO’s salary at Edison was approximately 350 times the median wage of non-management at Edison and the compensation of the CEO of Sempra was almost 400 times greater. This occurred despite both being monopolies whose profits are subsidized by ordinary people (ratepayers).

Based on Greenlining’s examination of hundreds of CEO packages, it appears that in almost every case, the compensation to the CEO and his top four officers substantially exceeds the dollar amount of philanthropy made by the corporation to low-income communities.

Perhaps it’s time for the nonprofit world to rise up and urge that cash philanthropy to the poor should always substantially exceed the aggregate compensation of a company’s top five officers. This might not stop excessive executive compensation, but at least low-income communities will benefit from this. Our estimate is that this alone would triple the amount of corporate philanthropy to nonprofits serving the poor.

6 thoughts on “Excessive Executive Compensation and the Decline of Median Family Income

  1. CEO waste is much worse than government waste ever was. We should nationalize this monopoly and stop stealing from poor people to facilitate CEO golf trips on private jets etc. Government can do a much better job.

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