San Francisco on Tuesday joined the nationwide “say on pay” effort by unanimously adopting legislation urging the San Francisco Employees Retirement System Board, which oversees The City’s $21 billion pension fund, to use its proxy power to reject excessive compensation of chief executive officers.
The legislation, introduced by Supervisor Jane Kim, also urges SFERS to report to the board by December the ratio of CEO-to-worker compensation of companies the pension funds are invested in and set guidelines for what constitutes “excessive” pay.
Kim said that last year the states of Wisconsin, Florida and Minnesota pension investment boards voted against 73 percent, 82 percent and 84 percent, of the paid packages that came before them, respectively.
“Here in San Francisco we only voted against 7 percent of excessive CEO compensation,” Kim said. That’s a percentage she hopes to boost through the legislation.
CEO pay and the proxy power effort is a result of the federal 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, which requires shareholder votes, or Say-on-Pay votes on compensation packages.
“While this is a small step actions like this ensure good corporate actors,” Kim said. “Hopefully we can encourage more public entities cities and states across the country to follow the lead of Florida, Minnesota and Wisconsin and hopefully San Francisco as well.”
Kim referred those interested in the issue to asyousow.org. The group argues on its website that “the current system of executive pay distorts incentives, exacerbates income inequality, and leads consumers and employees to think the game is rigged against them.”
In 2014, the CEO-to-worker pay ratio was 373 to 1, the CEO-to-minimum wage worker pay ratio was 774 to 1, and between 1978 and 2014, CEO pay increased by 997 percent.
“Our economy has continued to grow but it has done so at the expense of the hardworking people that are fueling our growth. We have become a top heavy nation … and increasingly flirting with oligarchy,” Kim said.