Financial Services Committee Advances Velázquez Bill on CEO Pay
Washington, DC – The House Financial Services Committee has passed legislation authored by Rep. Nydia M. Velázquez (D-NY) aimed at addressing growing income discrepancy between company CEOs, other senior staff and median-pay employees. Velázquez’s bill, the Greater Accountability in Pay, H.R. 4242, would require public companies to disclose the pay raise percentage of its executives and median-pay employees, as well as compare each to the rate of inflation.
The legislation builds on the Dodd-Frank Wall Street Reform and Consumer Protection Act, which the Congresswoman was closely involved in crafting. Dodd-Frank required publicly traded companies to provide information comparing the annual compensation of their CEOs to their employees. The bill approved by the House panel today would go a step further, making public raises for CEOs as compared to lower level employees.
“Americans are sick and tired of watching income inequality grow to ever more egregious levels,” said Velázquez. “By establishing tough transparency requirements for Wall Street companies and others, this bill takes an important step toward addressing this problem and holding public companies accountable for how they treat their employees.”
The Greater Accountability in Pay Act would also require public companies to disclose the ratio between the two pay raise percentages, information that would benefit investors considering purchasing securities in a firm.
“This is an issue of both worker fairness and giving investors data they need to make prudent decisions. Investors have a right to know if the companies they invest in are doing right by their employees,” Velázquez added. “Not only do many investors want to know they are putting money behind companies that are behaving responsibly, but this information is a useful indicator of a corporation’s health.”
In April, when major banks testified before the Financial Services Committee, Velázquez pressed the Wall Street chiefs on income disparity at their institutions. Video of the April exchange is online here.
“This is a simple issue of transparency,” Velázquez concluded. “To my Republican colleagues opposing making this information public, the American people want to know – what are you hiding?”
Velázquez’s bill was approved by a vote of 32 to 21. It will now need to be considered by the full U.S. House of Representatives. Velázquez is the third most senior Democrat on the Committee.