The International Brotherhood of Teamsters supports the SEC’s proposal to require corporations to reveal the difference between the pay of their CEO and their average workers. The SEC rule is required by the Dodd-Frank Act, which became law more than three years ago. Once the rule is written, investors such as Teamster benefit funds will have:
a better way to assess the board of directors who set executive pay;
a correlation between compensation practices throughout companies and morale and productivity; and,
an important way to measure CEO pay for advisory proxy votes on executive compensation plans.
Teamsters General Secretary-Treasurer Ken Hall said the Teamsters’ perspective is important as long-term investors protecting the retirement security of hundreds of thousands of American workers.
“The rule will help solve the problem of excessive CEO pay, which harms our funds’ investments, the sustainability of U.S. corporations and the employment and retirement security of Teamster members,” Hall said.
In the case of McKesson Corp., CEO John Hammergren was to receive a total compensation of roughly $50 million per year, including a pension with an estimated value of $159 million. That compensation package would have been more than 300 times what average McKesson workers take home. It also would have ignored McKesson’s stewardship of the company, which resulted in nearly $1 billion in fines paid to settle charges of Medicaid fraud and price-fixing. Investors balked at Hammergren’s excessive compensation at this year’s annual meeting. A majority vote by the shareholders rejected his compensation package and approved a shareholder proposal to strengthen the executive pay clawback policy.
The Teamsters’ letter to the U.S. Securities and Exchange Commission can be viewed here.