Warren to SEC Chair: “Step Up” (Or Step Down) [View all]

Sen. Elizabeth Warren on Tuesday released a blistering 13-page letter to Securities and Exchange Commission chair Mary Jo White, calling out her “extremely disappointing” leadership of what should be the chief cop on the financial beat, accusing her of “broken promises” and telling her to “step up.”


Broken Promises on CEO-Worker Pay

White has repeatedly promised and repeatedly failed to finalize regulations requiring corporations to report the ratio of CEO pay to that of their median workers, as mandated by Dodd-Frank. White even apparently lied to Warren’s face, promising in a private meeting that the regulations would be out this fall without fail, even as the SEC was announcing a calendar that projected release for next spring.

This is a big deal. Soaring CEO pay is central to the extreme inequality in America. Worse, perverse compensation policies give CEOs multimillion-dollar personal incentives to plunder their own companies. The bulk of their pay comes from bonuses predicated on short-term stock returns. So CEOs press to meet market “expectations,” merging, taking on debt, purging workers, slashing R&D, buying back stocks to lift prices – all designed to lift the stock price and pad their bonuses. Repeatedly they sacrifice the company’s long-term interests for short-term returns. By the time the damage surfaces, the CEO has already moved on.

Publication of CEO-worker ratios, therefore, is an important first step. It gives investors a clear measure of the health of the company. It gives activists and stockholders a measure to challenge excessive compensation packages.

That is exactly why CEOs have fought fiercely to delay issuance of the rules, while working with Republican legislators to repeal it. The repeated delays in issuing the rule are inexcusable, suggesting that White is tacitly conspiring with that effort.