Tags: Media Bias | Money

SEC Has Great Idea that Can Revolutionize Salary Negotiation

Thursday, 06 August 2015 12:11 PM Current | Bio | Archive

Regular readers of this column know I have a somewhat negative view of the federal Leviathan. That’s why it’s only fair to point out when Uncle Sam does something right.

Currently negotiating the salary for a new job, or a salary increase in a current job, is like playing poker with a dealer who not only knows what his cards are, he also knows what all your cards are too.

All the information is on the company’s side and all the ignorance is on your side.

That’s one reason it’s all I can do to keep from leaping across the table when a prospective employer asks, “What do you want to be paid?” Well for starters, twice what you’re paid to ask such a stupid question. It’s as annoying as the cop that saunters up to your window and says, “Do you know why I stopped you?”

In both situations almost any answer is going to cost you money.

A new rule from the Securities  and Exchange Commission (SEC) will alter the information imbalance. The Washington Post says the SEC’s will require publicly traded companies to disclose their “pay ratio.” That’s the difference between what top executives make and what the rank and file takes home, represented by a “median worker.”

Lefties think the rule will fight “income inequality,” but its real value is to employees who want to drive a harder bargain when it comes to their paycheck.

Bartlett Naylor, who works for a lefty think tank called Public Citizen, evidently agrees with me: “Out-of-balance pay ratios ‘will be public shaming, just as all adverse financial results are public shaming. If one reports low returns, skyrocketing expenses, that's shameful, too. Welcome to capitalism.’"

Shame in the suites has a certain ring to it. And it’s sadly lacking now. This “pay ratio” rule will help reverse the damage an earlier incomplete executive pay disclosure rule caused.

Twenty years ago corporate execs were milking their companies like a cow: Filling their own bucket with long pulls on the company teat when no one was looking.

The SEC changed that by requiring companies to disclose how many hot tubs it paid for, how often relatives commandeered the company jet and the total number of luxury pied-à-terres stockholders were supporting and in what cities.

Naive SEC bureaucrats assumed when the spending became public knowledge chastened executives would reform themselves. Much like the embarrassment caused in the SEC break room when security cams showed who was taking java without dropping a quarter in the coffee fund.

But as Charles Elson, at the University of Delaware, observed, " . . . that was based on the assumption that those who had asked for that kind of money were capable of that kind of embarrassment. And they weren't."

Instead the execs used the information to start a bidding war between compensation committees. But two can play at that game. The same information that led those at the top to pad their paycheck will help those at the bottom rectify their imbalance. Knowing what a company’s median worker makes let’s an employee gain a heretofore-unknown perspective on how his salary compares to the rest of the workers.

Just as a rising tide lifts all boats, a shining sun illuminates pay policies top execs want to keep hidden.

The rule would apply to almost 4,000 U.S. firms, leaving out small business and foreign companies. An association of corporate HR chiefs who oppose the rule because an ignorant employee is a low–paid employee, claim the data “can be easily misconstrued by employees, investors and customers.”

It’s ironic businesses that protest federal paternalism when in comes to running their enterprise are more than willing to assume the role when it comes to their own employees.

Maybe the customer service staff at Comcast might need some extra help and I’d send translators to Chipotle, but the rest of working America can understand a median wage and how it compares to the jefe at the top.

NorthWestern Energy, a utility the Post found in Sioux Falls, has pay ratio of 24 to 1, which near the former historic norm. Corporate Counsel Tim Olson says, “It takes one of our employees four hours to prepare [the data].”

Other corporate good guys that already share the information include Whole Foods, Noble Energy, and Bank of South Carolina, making me wonder why one of these CEO’s wasn’t invited to the State of the Union instead of “mattress girl.”

The only way to improve this rule for me would be the addition of a graph that compared the number of times the company’s CEO or lobbyist had called for “comprehensive immigration reform,” compared with the probable decline in inflation–adjusted company wages as Latin America’s population moved north.

Michael R. Shannon is a commentator, researcher (for the League of American Voters), and an award-winning political and advertising consultant with nationwide and international experience. He is author of "Conservative Christian’s Guidebook for Living in Secular Times (Now with added humor!)." Read more of Michael Shannon's reports — Go Here Now.

© Copyright 2015 Michael Shannon.



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A new rule from the Securities and Exchange Commission (SEC) will require publicly traded companies to disclose their “pay ratio.” Just as a rising tide lifts all boats, a shining sun illuminates pay policies top execs want to keep hidden.
Media Bias, Money
Thursday, 06 August 2015 12:11 PM
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