This disconnect has also led to abusive practices on Wall Street, where shareholders have paid tens of billions of dollars to settle lawsuits caused by the wrongdoing of bank executives whose pay packages encouraged them to commit fraud.
It is not yet clear how effective Switzerland's measure has been in changing corporate practices. But shareholder activism, together with worker activism, could make such a move quite effective -- here, and worldwide.
3. Tax policy can be used to minimize abusive pay practices.
The California legislature is once again considering a measure that would increases taxes on corporations whose CEOs make more than 100 times as much as its median employee wage. In the bill's latest version, that revenue would be used to provide tax credits for companies relocating to California. (A considerably stricter measure, rejected by Swiss voters, would have restricted senior executive pay to 12 times that received by junior employees.)
That's one of the practical uses to which data like the SEC's could be put.
Some Democrats in Congress are now proposing to disallow tax deductions of more than $1 million for senior executive pay -- unless the corporation pays its lowest-paid employees $10.10 per hour or more, in which case that ceiling is lifted.
4. This information can help improve government contracting and procurement practices.
The federal government and the states may choose to use this information when soliciting bids for government services. It would be reasonable for elected officials to consider the effect of a corporation's compensation policies on the overall economy when giving out taxpayer dollars for lucrative contracts.
These decisions could be implemented by executive order, much as President Obama has done with recent orders requiring federal contractors to pay a minimum of $10.10 per hour and observe all appropriate labor laws.
5. It can be also used to stimulate further debate.
Open, informed debate will almost certainly lead to additional creative ways to apply this data -- both to amplify employee purchasing power and to improve government policy.
Other creative ideas might include tax relief for corporations that have appropriate levels of shareholder oversight, or who can demonstrate they have a reasonable ratio of senior executive compensation to average employee pay.
A free and open society runs on information, and these rules on executive compensation can make an important contribution to our nation's economic conversation. They have been under discussion at the SEC for years. It should finalize them, once and for all, at the earliest possible opportunity.
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