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April 07, 2000
Shareholders Work to Close the Income Gap
Responsible Wealth members filed ten shareholder resolutions this year urging companies to share
their profits more widely with employees.
SocialFunds.com --
Amidst stunning reports of another record-breaking year for CEO compensation in 1999, average
workers have only made tiny advances in income after years of falling real wages. Meanwhile, a
coalition of shareholders is struggling to reverse this trend of pay inequity by sponsoring
shareholder resolutions with creative solutions.
 Responsible Wealth (RW), a growing network of
over 450 businesspeople and investors, sponsored ten shareholder resolutions this year dealing with
closing the income and wealth gap in the U.S. Representing the top 5 percent of income and wealth
in the U.S., RW members are concerned about growing economic inequality and are working to promote
widely shared prosperity through shareholder activism and other venues.
The average CEO
compensation jumped 23 percent last year, to $11.9 million, while the average full-time worker pay
rose a mere 3 percent, to about $33,000. RW members assert that companies with a broader base of
ownership and more pay equity grow faster, have higher quality employees, and lower turnover.
"Companies that make CEOs megamillionaires and billionaires while shortchanging most employees
are building on quicksand," says Scott Klinger, Co-director of Responsible Wealth.
The
ten varied resolutions filed by RW members call on companies to link CEO compensation to worker
compensation, freeze CEO pay after layoffs, establish or report on employee stock ownership plans,
or report on pay equity. An additional four resolutions filed by RW dealt with corporate governance
and corporate power issues.
One resolution asks Honeywell to establish a maximum ratio
between the pay of the CEO and the lowest paid worker. Honeywell CEO Michael Bonsignore made almost
$54 million in 1999 while 11,600 workers are being laid off worldwide due to the merger with
AlliedSignal.
Resolutions at AT&T, Fleet Financial, Huffy, and Raytheon ask the companies
to freeze executive compensation during periods of downsizing, based on a similar history. For
instance, after announcing it would lay off more than 15,000 workers in 1998, Raytheon increased
the salary and bonuses of its top four officers by more than 30 percent.
"Corporate
executives should not have all the gain while regular employees have all the pain," said Judith
Barnet, an AT&T shareholder who filed the resolution with that company.
RW members filed
a resolution for a pay equity report with R.R. Donnelley, reflecting the shareholders' response to
three lawsuits alleging discrimination over the last decade, including a $250,000 pay equity
settlement in 1998. A similar resolution drew a 16.2 percent vote of support last year, but it only
drew 6.5 percent support at the R.R. Donnelley meeting last month, in a preliminary count, barely
enough to qualify it for resubmission next year.
Shareholder resolutions filed with
Citigroup and Walt Disney called upon each company to create a universal employee stock ownership
plan. As the Disney resolution notes, if only half the over $1 billion CEO Michael Eisner has
reaped from exercising stock options since 1992 had been divided among Disney*s 117,000 worldwide
employees, they would have received, on average, over $4,200 each.
However, the
Securities and Exchange Commission (SEC) to omit both the Citigroup and Disney resolutions because
they deal with employee benefits, considered a part of "ordinary business" that shareholders may
not vote on. The SEC also excluded resolutions at MBNA and American Home Products that called for
reports on employee stock ownership.
Objecting to the SEC decisions, Scott Klinger said,
"The SEC should be part of the solution to harmful compensation practices, not part of the problem.
There is clear and consistent evidence that broad-based employee ownership improves corporate
performance and enhances shareholder value."
Or as Responsible Wealth member Michele
McGeoy put it at the February Disney shareholder meeting, where she spoke in favor of the omitted
resolution, "It*s time that Disney think of its employees as assets, not just Mickey Mouse."
©
SRI World Group, Inc. All Rights Reserved.
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