Chicago Boyz

                 
 
 
What Are Chicago Boyz Readers Reading?
 

 
  •   Enter your email to be notified of new posts:
  •   Problem? Question?
  •   Contact Authors:

  • CB Twitter Feed
  • Blog Posts (RSS 2.0)
  • Blog Posts (Atom 0.3)
  • Incoming Links
  • Recent Comments

    • Loading...
  • Authors

  • Notable Discussions

  • Recent Posts

  • Blogroll

  • Categories

  • Archives

  • More and Better Disclosures!

    Posted by David Foster on March 29th, 2018 (All posts by )

    It’s now required for publicly-traded companies to publish the ratio between the CEO’s annual compensation and that of the median employee.  That ratio is, for example,  367:1 at Disney (Robert Iger), 124:1 at Deere & Co (Samuel Allen), and 50:1 for Whirlpool (Jeff Fettig). Link

    These numbers (which, it should be clarified, include seasonal and part-time employees) have caused much alarm in many quarters, and even referred to as heralding a “crisis of capitalism.”

    But why stop at CEOs and other business executives when requiring this kind of analysis?  My idea is that there are many other fields in which high-visibility disclosures could be interestingly required…

    In movies, for example, it should be required that the opening credits include the ratio of the pay of each of the top 5 stars to the median pay of the entire crew that worked on the film–including accounting clerks, boom operators, sweepers, and various ‘assistants to’.

    In professional sports, team uniforms should display prominently the total value of the player’s current contract.  This feature would greatly add to the pleasure of fans, who could instantly and continuously compare the player’s financial value to his demonstrated, moment-by-moment playing-field value.

    At colleges and universities, a sign out front of the president’s mansion should display the ratio of his compensation to that of the median faculty member, which category of course must include the starvation-paid adjunct professors.  (The compensation number for the president should certainly include the imputed value of his university-provided mansion and any other similar benefits, such as cars and drivers.)

    For politicians, the disclosure problem is a little more complicated, since in many cases the main financial payoff for these jobs is in the form of “deferred compensation”, i.e., lobbying positions and consulting contracts offered after the term of office ends, in recognition of services rendered while in office.  About all I can think of for the politician class is that, for all public appearances, they must wear jackets, with the names of their top sponsoring/contributing organizations prominently emblazoned, in a manner similar to the way racecar drivers display the names of their sponsors.

    There are probably a lot of additional possibilities for disclosure and transparency, which the ChicagoBoyz and Chicago Grrrlz and Readerz can surely suggest.

    Concerning those who support the CEO pay-ratio requirement but would object to these further suggestions…I have to wonder if their primary agenda really concerns ‘inequality’ or is really about something else.

     

    10 Responses to “More and Better Disclosures!”

    1. Assistant Village Idiot Says:

      Or we could judge people based on the content of their character instead.

    2. Overload in CO Says:

      It wouldn’t work for movies, as stars are no longer directly paid. Instead they have shell companies to hide the income from tax payers.

      Isn’t there also something where CEO get low salaries, but high benefits like stock options, use of a car, etc?

    3. tyouth Says:

      “required” ? I’m guessing that’s hyperbolic David?

    4. David Foster Says:

      Overload…”Isn’t there also something where CEO get low salaries, but high benefits like stock options, use of a car, etc?”

      The standard required disclosure in (annual) 10-K submissions does include estimated value of stock grants, options, and various other compensations:

      existing executive compensation rules, namely Item 402(c)(2)(x)

      It appears that the Dodd-Frank requirement for median-ratio publication references this same methodology:

      https://www.sec.gov/news/pressrelease/2015-160.html

    5. David Foster Says:

      The PayScalelink at the beginning of this post says that they looked only at cash compensation, but the actual SEC filing for Disney cites Salary for Robert Iger at $2.5 million….the rest of the $36.2 million cited represents stock awards, option awards, etc.

      https://www.sec.gov/Archives/edgar/data/1001039/000104746918000180/a2233502zdef14a.htm#execcomp

      (page 36)

      So, now that I look at it in some detail, I’m not sure where exactly the $26MM cash compensation cited in the PayScale report actually came from.

    6. CapitalistRoader Says:

      For politicians, their net worth along with the percentage increase in net worth from the day before the took office to the present.

    7. David Foster Says:

      Correction: The 2017 salary for Iger at Disney was indeed $2.5MM, but it appears that the ‘non-equity incentive compensation’ of $15.2MM was probably also cash.

      However, the formal, legally-required disclosures do require that equity grants, etc, be included. Here’s the one for Norfolk Southern Railroad:

      https://seekingalpha.com/filing/3945499#NORFOLK3300981-DEF14A_HTM_SUMMARYCOMPENSATIONTABLE49

      See page 49.

    8. Anonymous Says:

      For universities the comparison should include all employees, not just faculty. That would include grad assistants and football coaches as well. The comparison should include the chancellors of the university systems as well.

      What fun! Much of this info is public domain (in the case of state colleges) so no law is required. It only requires collection and presentation.

      Death6

    9. David Foster Says:

      Death6….alternatively, comparison could be with family income of students attending the university.

      Professional sports, compare ’em to average income of the fans.

    10. PenGun Says:

      As long as the numbers are available, I prefer to do my own math.

    Leave a Reply

    Comments Policy:  By commenting here you acknowledge that you have read the Chicago Boyz blog Comments Policy, which is posted under the comment entry box below, and agree to its terms.

    A real-time preview of your comment will appear under the comment entry box below.

    Comments Policy

    Chicago Boyz values reader contributions and invites you to comment as long as you accept a few stipulations:

    1) Chicago Boyz authors tend to share a broad outlook on issues but there is no party or company line. Each of us decides what to write and how to respond to comments on his own posts. Occasionally one or another of us will delete a comment as off-topic, excessively rude or otherwise unproductive. You may think that we deleted your comment unjustly, and you may be right, but it is usually best if you can accept it and move on.

    2) If you post a comment and it doesn't show up it was probably blocked by our spam filter. We batch-delete spam comments, typically in the morning. If you email us promptly at we may be able to retrieve and publish your comment.

    3) You may use common HTML tags (italic, bold, etc.). Please use the "href" tag to post long URLs. The spam filter tends to block comments that contain multiple URLs. If you want to post multiple URLs you should either spread them across multiple comments or email us so that we can make sure that your comment gets posted.

    4) This blog is private property. The First Amendment does not apply. We have no obligation to publish your comments, follow your instructions or indulge your arguments. If you are unwilling to operate within these loose constraints you should probably start your own blog and leave us alone.

    5) Comments made on the Chicago Boyz blog are solely the responsibility of the commenter. No comment on any post on Chicago Boyz is to be taken as a statement from or by any contributor to Chicago Boyz, the Chicago Boyz blog, its administrators or owners. Chicago Boyz and its contributors, administrators and owners, by permitting comments, do not thereby endorse any claim or opinion or statement made by any commenter, nor do they represent that any claim or statement made in any comment is true. Further, Chicago Boyz and its contributors, administrators and owners expressly reject and disclaim any association with any comment which suggests any threat of bodily harm to any person, including without limitation any elected official.

    6) Commenters may not post content that infringes intellectual property rights. Comments that violate this rule are subject to deletion or editing to remove the infringing content. Commenters who repeatedly violate this rule may be banned from further commenting on Chicago Boyz. See our DMCA policy for more information.