Ask AFSCME

Why does AFSCME care about excessive pay for corporate executives?

Bobby Jones
Dispatcher for the Londonderry (N.H.) Police Department, Local 3657 (Council 93)

AFSCME members’ retirement assets — worth $1 trillion — are invested by public pension funds. Our retirement depends on how they perform. Fighting to improve corporate governance practices and promoting corporate accountability helps to increase shareholder value. Excessive CEO compensation, on the other hand, continues to deplete a company’s earnings and lowers its long-term value. This is why AFSCME believes that shareholders should have a say on pay.

GOING PUBLIC | AFSCME activists, including one dressed in a chicken suit, urge Home Depot directors to show their faces to stockholders concerned about exorbitant CEO compensation instead of acting like “chickens.”
PHOTO CREDIT: Edward Savaria Jr.

As AFSCME president and chair of the Employees Pension Plan Gerald W. McEntee says: “Large institutional investors have a duty to actively encourage good governance and corporate accountability.”

Excessive Pay Epidemic

Only a few months ago, AFSCME successfully spearheaded an effort widely covered by the media to oust Home Depot CEO Robert Nardelli because of his excessive $150-million pay for poor performance at the helm of the retailer giant. While working families struggle to keep their head above water, we are witnessing an epidemic of excessive compensation for top executives. In 2005, the average CEO was paid almost $11 million a year, while the average worker earned just under $42,000 over the same period.

AFSCME’s pension plan remains a leading shareholder activist. Through it, the union recently helped form a network of institutional investors committed to giving shareholders a vote on corporate executive pay. Similarly, AFSCME is working to make it easier for shareholders to nominate candidates to serve on corporate boards and to make those boards more accountable.

Learn more about AFSCME’s shareholders proposals for 2007 at afscme.org. (To read what AFSCME members think about holding corporations accountable, see “Talk Back”in this issue.)

Best Paid CEOs in 2006

* Prior-year data. Source: Forbes.com