Senator DeSaulnier Announces Amendments to CEO Compensation Bill

August 27, 2014 11:21 am · 55 comments

Senator Mark DeSaulnier (D-Concord) has announced amendments to SB 1372 to address the growing disparity between CEO and worker pay, while also providing funding to retain California companies and attract new businesses.

SB 1372 creates a new corporate tax table that decreases taxes for employers with sensible differences between CEO and worker pay, and increases taxes on companies with large disparities between CEO and worker pay. New amendments to SB 1372 require excess funds generated by this new corporate tax table be used by the Governor’s Office of Business and Economic Development (Go-Biz) to offer tax credits through the California Competes Tax Credit to companies that want to come to or stay and grow in California. These funds would only be available to companies in which the CEO makes no more than 100 times of the median worker salary.

“Instead or rewarding companies with outrageous CEO compensation, most of which are from out of state, we should be reinvesting in California companies with fair pay for workers,” Senator DeSaulnier said. “SB 1372 generates funding aimed directly at retaining California companies or attracting new businesses with reasonable CEO pay to our state. We can stimulate economic development in California’s communities, while also promoting fair pay for workers. California needs to focus on restoring the true engine of our economy—the middle class.”

Under SB 1372, taxes would decrease for companies in which the CEO makes no more than 100 times of the median salary of workers. Taxes would increase on companies that pay CEO’s 100-400 times more than workers.
The Franchise Tax Board (FTB) estimates the corporate tax table established under SB 1372 would result in revenue gains of $100 million in 2014-15, $320 million in 2015-16, and $340 million in 2016-17.

Each year, 25% of the revenue generated shall be reserved for small businesses. Additionally, no more than 20% of the funding available through the tax credit may be allocated to any one taxpayer in a single year. The California Competes Tax Credit prioritizes businesses in areas of high unemployment and poverty.

According to the AFL-CIO’s Executive Pay watch, in 2012, the CEO of an S&P 500 Index company received an average compensation of 354 times more than the median US worker. In 2012, the average CEO pay in California was $5,054,959, while the median worker pay in California was $48,029.

1 WTF August 27, 2014 at 11:23 AM

Why do guy mint employees think they have any say in what CLOS earn?

2 Concord Mike August 27, 2014 at 11:27 AM

I also think its outrageous that 49er football players are paid 500x the amount paid to the guys selling pizza in the stands.

No justice no pizza !!

3 Beatrice Ruane August 27, 2014 at 11:30 AM

Good Work ,please keep up your fight for the middle class…

4 The Professor August 27, 2014 at 11:59 AM

What a freakin’ joke. Next they will tell YOU that you are paid too much. And that YOU need to give more…..for the middle class (or the elderly, or “less fortunate”, or the children, or whomever).

When will the dipsh*ts in Sacramento realize that if you keep squeezing for more taxes, then the tax base will simply move. Do they ever wonder why Texas creates jobs by importing them from states like Commifornia. Do they ever wonder why so many people retire out of state or why do wealthy individuals establish residency in Nevada?

Pretty soon, the only people left will be those who take handout from Uncle Barack and Uncle Jerry. How will Mark squeeze those guys?

5 @Concord Mike August 27, 2014 at 11:59 AM

That would mean that the NFL,the NBA and MLB would be exempt from the law. Have to find out about Aren Football though.

6 Addendum to bill August 27, 2014 at 12:00 PM

As part of the bill, they should distribute maps to companies that show the fastest way out of California. That’s essentially what these efforts do, not sure why these dolts in office don’t realize that. Nice work.

7 @Concord Mike August 27, 2014 at 12:00 PM

Sorry. Arena football

8 WC August 27, 2014 at 12:11 PM

1) Per Mark, “We can stimulate economic development in California’s communities, while also promoting fair pay for workers. California needs to focus on restoring the true engine of our economy—the middle class.”

Promote fair pay for workers, what? Mr. CEO is going to increase all the worker salaries to bring the multiplier down! LOL
AND
2) The California Competes Tax Credit prioritizes businesses in areas of high unemployment and poverty.

Ok, businesses in these areas most likely will no maximize the use of the money this bill will collect… How about businesses apply, not matter where they are located, for the funds. The state (Go Biz) will review the application and determine which generate jobs, benefit the CA economy etc.

This is basically a redistribution of wealth that these CEOs will figure out how to dodge pretty quick. It will also have move companies heading out of this state.

9 Mark August 27, 2014 at 12:18 PM

Yep… that will attract more business to California.
One small step towards Socialism and one giant leap backwards for California’s economy.

Don’t want any of the big companies staying here anyway.
Amazing how so many states are trying to attract business and we come up with all this foolishness to make it difficult.

10 Captain Bebops August 27, 2014 at 12:21 PM

CEOs are nothing special. They are just good at pulling a con job to get such high salaries. They know well there are thousands of folks out there who could just as easily fill their shoes and for far less money. One wonders why the board of directors of companies allow such ridiculous salaries but the answer is they are all members of the same “old boys” club.

CEOs are the new “landed gentry” and some of them are crazy enough to believe they are doing “God’s work.”

11 melliemom August 27, 2014 at 12:23 PM

We live in a free market society. This means if you don’t like what a CEO makes or how a company is run, don’t buy that product. Vote with your dollars.

This is not the real role of the government and they should butt out. Corporations are crazy if they stay inside CA.

12 Mark August 27, 2014 at 12:27 PM

Who the hell is voting for for these idiots?

13 ..... August 27, 2014 at 12:39 PM

@Captain #10….

So let’s see you fill the shoes of the Yahoo CEO. Or the Apple CEO. Or any other multi-million dollar corporations. No? Why not?

This idiot has no concept of businesses that are OWNED by their shareholders and are therefore responsible to them. Any corporation that is big enough to be affected by them can just up and move out of state. Then gues what – this state just MORE jobs!

This BS of “fair pay” and “sensible differences” is pushed only by one group – that of the AFL-CIO whose report is referenced. You know who’s contributing to DeSaulnier’s campaign…..just follow the money.

Damn idiot!

14 Impressed! August 27, 2014 at 12:45 PM

Wow! What can I say? I’m *really* impressed that these politicians were able to *objectively* determine what a “sensible” pay difference for CEOs is! Especially since “sensible” is subjective, and none of them are economists! Furthermore, I’m really excited that not only is the pay gap they determined “sensible”, but it will always be sensible imperpetuity, since the economy changes all the time that’s *really* hard to do! (After all, Marx said “all that is solid melts into air”)

15 CEO your way out of Cali August 27, 2014 at 12:49 PM

What a joke. If a company wants to pay the CEO big bucks that’s the company’s prerogative. So what if you or I or anyone else thinks it’s too much. Don’t buy their products. If they don’t pay the rest of the employees what they think they deserve, they can leave. Government employment should be a different story though. Their salaries are paid by taxes, which we have no choice but to pay. A City Manager, for example, should not be paid so much money that there is none to give increases to the rest of the City’s employees.

16 Anon August 27, 2014 at 12:58 PM

Let’s compare the pizza guy to the top paid city employee and include all their overtime and perks (majority of stadiums owned by cities). Think we need to collect some more taxes…oh wait, it doesn’t apply to government, what a silly thought.

17 Freeman August 27, 2014 at 1:09 PM

“…decreases taxes for employers with sensible differences between CEO and worker pay”

Who gets to define sensible? It’s sensible that a private company has the right to pay whatever they want to their CEOs without being punished with LEGAL FORCE from the State.

It’s not “sensible” for the State to have control in this matter.

18 Sherry Whitmarsh August 27, 2014 at 1:13 PM

More reasons for companies like Chevron to leave the state

19 Safety Second August 27, 2014 at 1:15 PM

“Divide and Conquer” …official slogan of the democrat party

20 ClayDen August 27, 2014 at 1:25 PM

Isn’t government control of private business called Fascism?

21 Melissa August 27, 2014 at 1:27 PM

yes, Clayden, yes it is.

22 Captain Bebops August 27, 2014 at 1:38 PM

@….. #13

Well guess what? I helped take a company public so VERY MUCH DO have an idea about such things as well as executive compensation. I also have a technical background and might even be able to make better judgment calls than current Yahoo management.

The key to being a CEO for a publicly held company is the ability to talk to bankers. The rest is playing poker and more often having the right pedigree. And BTW, its small companies that innovate and create jobs. Then the big companies gobble them up, lay off people who duplicate jobs at the consuming company.

The robber barons have returned though more likely they never left.

23 aClaycordian August 27, 2014 at 1:46 PM

No ClayDen, it’s called communism. It’s usually enforced by a fascist government.

24 Tom August 27, 2014 at 1:59 PM

A lot of people are overpaid, including CEO’s. I stay out of other peoples finances.

Push yourself to make more money. Upward mobility! An equal opportunity employer……

25 Elwood August 27, 2014 at 1:59 PM

Oh, dear God! I can’t wait for Senator Dimwit to go to Washington and hopefully disappear forever.

26 The Realist August 27, 2014 at 2:32 PM

What? this doesn’t apply to government positions?
If it did, would that mean the $400,000 a year city manager would get a pay cut or,
the hourly maintenance worker that makes so little they qualify for assistance/food stamps would get a raise?
My bets would be on the little guy continued to being screwed.
It’s quite said that a city as diverse as Concord still perpetuates such economic disparity. I can’t find the webpage but I saw a list of city managers VS CEO with equivalent sized employees. If Concord were a private business, the city manager would be getting paid about $150,000.
We are all in the wrong line of work.

27 Dorothy August 27, 2014 at 2:40 PM

Nope, don’t think it’s going to pass. The big money donors to politicians just might not donate as much if the politicians cut their pay and perks. Then the politicians might have to depend on what they take from taxpayers. Taxpayers can’t afford to keep the politicians in the style they are accustom to and might vote them out. Then the politicians would have to back and undo the bill so the big money donors will donate again.

28 Lets Just Ignore Reality August 27, 2014 at 2:47 PM

So lets just ignore how CEO compensation has gone from 40 times worker salaries in the 1960’s to around 300 today. It is a real problem that is further eroding the disappearing middle class. So what’s all your solutions other than blaming teachers and public employees…and I like how if you ever try and discuss it you’re a wealth redistributing commie who’s waging class warfare….. The wars over, the rich won!

29 ..... August 27, 2014 at 2:48 PM

Well then Cap’n – go ahead and let Apple or Yahoo know you’re ready to take over and show them how it’s “supposed” to be done….

I’m waiting…..

30 ... August 27, 2014 at 3:31 PM

Read the bill for yourself.
http://www.leginfo.ca.gov/cgi-bin/postquery?bill_number=sb_1372&sess=CUR&house=B&author=desaulnier_%3Cdesaulnier%3E

From text of the Office of Senate Floor Analyses
http://www.leginfo.ca.gov/pub/13-14/bill/sen/sb_1351-1400/sb_1372_cfa_20140822_164233_sen_floor.html

“OPPOSITION : (Verified 8/22/14)
Air Logistics Corporation
Associated General Contractors of California
California Apartment Association
California Bankers Association
California Chamber of Commerce
California Grocers Association
California Manufacturers and Technology Association
California Restaurant Association
California Retailers Association
California Tank Lines, Inc.
California Taxpayers Association
Chemical Transfer Company
Council on State Taxation
National Federation of Independent Business
Orange County Business Council
Orange County Taxpayers Association
Silicon Valley Leadership Group
Superior Tank Wash, Inc.
TechAmerica
The Chamber of the Santa Barbara Region
West Coast Leasing; LLC
West Coast Lumber and Building Material Association”

“SUPPORT : (Verified 8/22/14)
AFSCME
California Labor Federation
California Tax Reform Association
Courage Campaign”

From opposition statement “California Chamber of Commerce states this bill “would unnecessarily increase corporate income tax rates (potentially by more than 120%)…”

http://www.opensecrets.org/

Face it democrats are pandering for votes in an election year.
Should not compensation be the concern of stockholders of a publicly traded company?

CA is ranked worst state to do business and has been for 10 straight years.
Where is the percentage in screwing with people who decide where the business is going to operate? What’s to stop them from moving the business out of the state?
http://chiefexecutive.net/California-is-the-worst-state-for-business-2014
http://chiefexecutive.net/category/best-worst-states-for-business

Or is this bill another way to increase revenues to the state without going to the voters?
Again from text of the Analyses, “The FTB estimates that this bill will result in revenue gains of $100 million in 2014-15, $320 million in 2015-16, and $340 million in 2016-17 (General Fund).”

Should a person promoting a bill that could potentially drive more businesses from CA be trusted in congress?

31 Marianne August 27, 2014 at 3:34 PM

Faith will get us through the worst…and hopefully through this legislation.

32 PO'd August 27, 2014 at 3:36 PM

I imagine Texas, Nevada and many other states will be very pleased if this passes. California is already the last place any large company will be centered, and this proposed legislation will insure that a lot of middle class jobs will lost in the process.
Like it or don’t-wealthy individuals create jobs, and they can move anywhere they want to.That is the big blow to middle class employment.Even New York advertises here to move your company to their state.
This is a very slippery slope having the state gov’t decide what private sector salaries are acceptable.

33 SKS August 27, 2014 at 4:07 PM

The role of government does not include what private companies pay their executives.

This kind of BS reeks of socialism.

34 Anonymous August 27, 2014 at 5:05 PM

Knock it off people. He can’t help himself, he is addicted to fees and taxes.

35 Atticus Thraxx August 27, 2014 at 5:18 PM

And here I thought share holders decided how and how much to compensate executives. It sounds (any of you legal types correct me) like punitive and discriminatory taxation.

36 Mark is a communist August 27, 2014 at 6:18 PM

Yes you are Mark. You’re tax scheme is designed to take money from people YOU say don’t earn it and give to people YOU say deserve it. AFTER you take your cut like a good czar.

Taking other people’s money is a sin. It’s immoral. AND, you are destroying what is left of a free market. Free markets work so well, that even after thieves like you skim and tax and steal and pervert it to the point it’s un-recognizable, even the tattered ashes of a once free market won’t die just quite yet. But it will. You’re killing the golden goose Mark. One tax at a time. Fool.

You better figure our how to tax me after I’ve retired and left California because I’m so outa here !

37 Aldridge Family August 27, 2014 at 7:20 PM

Mark really? I wonder if Mark paid his workers the same he paid himself as an owner? What a joke that AFL-CIO’s is trying to be the monitor. Have you seen really seen union compensation packages?

38 RIII August 27, 2014 at 7:37 PM

So, an individual decides to go into business. He/she puts up their own money and they get all the proper permits, business license, and so forth. Then, they hire someone. The individual(s) they hire have put up absolutely nothing. They came looking for a job and they were hired. They agree to do whatever they have been hired to do and now some politician decides how much the business owner can draw from this new business. Is anything wrong with that picture? Again, it’s just control, control and more control. When will this “Elected Representative” ever do something other than grandstand and pen “Feel Good Legislation?”

39 Captain Bebops August 27, 2014 at 7:47 PM

Apparently our Claycord rednecks believe that corporations get their money honestly. Boy is that a laugh.

40 Ven Xeters August 27, 2014 at 9:14 PM

The only people who should be concerned about what a CEO makes are the shareholders (owners) of that company. What Mark will never understand is an elected official is supposed to represent the people, not the special interest groups who pull his strings like a puppet. The greatest financial issue facing the state is bloated public employee pension obligations. This is a real issue, not made-up class warfare grandstanding. Mark could take the high road and propose a 100% state income tax surcharge on all public pensions that exceed $100K/ yr. Don’t hold your breath though as he would never ever bite the hand that feeds him.

41 ....... August 27, 2014 at 9:55 PM

Okay, “captain”.

Prove to me that corporations don’t get their money honestly.

And by “honestly”, I refer to being in compliance with the IRS tax code. You can’t define it any other way, buttercup.

Specific examples, please. And since you didn’t state “some corporations” , I’m assuming you meant ALL corporations.

Let’s hear it.

And btw, tell us about that company you helped go public – which makes you an expert on CEO compensation. Specifics, please.

And btw again, referring to claycord readers as “rednecks” because they disagree with you tells me that you’re nothing more than an uneducated close-minded Neanderthal who claims to be enlightened by “having helped bring one company public .”

“I did it once, so I’m an expert!”

idiot!

42 ....... August 27, 2014 at 9:56 PM

Captain must be one of mark’s office staff.

43 Anonymous August 27, 2014 at 10:04 PM

This is called going far left to get contributions from SEIU etc. Better he go to Washington where he will be completely defanged for now.

44 Pat Pomeroy August 27, 2014 at 10:29 PM

So the average pay of a CEO in California is $ 5,054,959.

Movie Stars pull in upwards of $ 50,000,000 per picture (including profit participation) and Sports Stars pull in upwards of $50,000,000 per year (including endorsements).

Will we see a bill forthcoming from Mr. DeSaulnier addressing the compensation discrepancies between workers in these industries?

45 Jesse August 27, 2014 at 10:54 PM

Atticus, the shareholders do not decide on executive compensation. The Board of Directors does that. I have stock in Wells Fargo Bank. Every year I receive a proxy statement. One of the items I get to vote on is an advisory resolution on compensation for the top six executives. Every year I vote “No” because I believe their compensation is excessive. But it really doesn’t matter how I or any of the other shareholders vote because the resolution is not binding on the Board of Directors. Here is the compensation I voted against last time:

Chairman, President and CEO: $19.3 million

Senior Executive Vice President and CFO: $8.815 million

Senior Executive Vice President, Wealth, Brokerage and Retirement: $8.815 million

Senior Executive Vice President, Wholesale Banking: $11.04 million

Senior Executive Vice President, Consumer Lending: $8.815 million

Senior Executive Vice President, Community Banking: $8.73 million

While I agree with the sentiment behind DeSaulnier’s proposal, I think it is a bad idea. It will encourage corporations to leave California. Any attempt to rein in excessive executive compensation needs to be done on the federal level rather than the state level.

46 Anon August 27, 2014 at 11:29 PM

And you all sent him to to the US House, what a joke.

47 Antler August 28, 2014 at 12:20 AM

Jesse,

You have written accurately, and I agree with you that corrective legislation needs to be at the federal level. The only difference in our stories is that my personal account is with Bank of America, which in all its beautiful fairness, raised corporate incomes, lowered shareholder dividends, and also pays an abysmal interest rate even to those who hold large Money Market accounts.

But I do note the way many of you on here write as though you are e corporate CEO or have the connections ever to become one. Corporate inequities are helping to build a slave class in this country. You know it. And you do not care. You seem fine with letting people be hungry and cold; and you know you will be screaming the loudest when they DARE to rebel, at which point you still will neither help them nor protect anyone else against them. You are Plate Glass Fools, and your attitude is destroying this United States in that it pits one state’s rights against another’s. You stack cordwood under the cauldron of racism and class division every chance you get.

I was by sheer luck born into and stay in the privileged class. And we need to play using fair rules…. if not voluntarily and with thanksgiving, then through legislation requiring us to do so. That is not at all the same as requiring that everyone make the SAME wage. And it is not fascist or communist, either. It is DECENT.

48 THE BLACK KNIGHT August 28, 2014 at 2:55 AM

You forgot the legislation that will reduce the pay for members of the California State Legislature to the level that is equal to the yearly average income of California workers.

You also forgot the legislation to fix the problem you helped create a dozen or so years ago that increased the benefits to public safety workers by 50%, and that allows them to retire at age 50 with 3% of the pay they earned each year worked, while Contra Costa County was facing a budget deficit of tens of millions of dollars.

How about you work on reforming government first. You can start in the California State Senate which has an arrest rate more than double that of the state. Arrest rate for the state is 1.3 people per every 40 people while the arrest rate for the California State Senate is 3 Senators per the 40 Senators California has.

49 Atticus Thraxx August 28, 2014 at 6:11 AM

The board usually holds majority shares hence shareholders choose executives. If your gonna correct me be correct.

50 @47 Antler August 28, 2014 at 8:24 AM

It’s SOCIALIST at best. Take your uneducated line of thinking to another country where they don’t value freedom.

Yes, you are uneducated because it’s clear that you were not taught accurate history. Historically, the success of our economy has been dependent upon a free market.

You probably learned more about transgender inequality than what makes our country run. Where did you go to school ? Cal ?

51 Interesting August 28, 2014 at 9:17 AM

Antler, if you want to consider living in Concord (Bailey and Concord Blvd. area) the “privileged class”, go right ahead.

I thought that was a middle class area, but what do I know.

52 Claycordian August 28, 2014 at 10:23 AM

I keep saying: “Vote ALL of these idiots out of office.” DRIP (Don’t return Incumbent Politicians) on them!

53 Antler August 28, 2014 at 10:43 AM

Atticus, not sure whether your comment was directed at me. But just in case…..yes, we stockholders do elect the executives from a small homogenous selection, but we have no say in the salaries or bonuses they give themselves.

nameless at #50 ….. Your comments are so distanced from the truth as to make me laugh. And you are an insulting clod who added no information of substance.

Interesting at #51….
WHERE one CHOOSES to live…
HOW one CHOOSES to live…..
NEITHER defines what MIGHT be the place and way one MIGHT choose to live!

Your derision is noted and round filed.

54 Atticus Thraxx August 28, 2014 at 11:02 AM

Directed at Jesse.

55 Jesse August 28, 2014 at 12:28 PM

Atticus, in small private companies, you are correct. The major shareholders sit on the Board of Directors. That is not the case for large publicly traded corporations. DeSaulnier’s bill applies only to publicly traded corporations.

Take a look at Wells Fargo, for example. Warren Buffet’s Berkshire Hathaway is the largest shareholder, with 9%. I don’t see a Berkshire Hathaway rep on the Board. I do see a former US Department of Labor Secretary (Elaine Cho), the Executive Chairman of Vulcan Materials Company (Donald James), the retired chairman of a General Mills (Stephen Sanger), the President and CEO of Dignity Health (Lloyd Dean), and the CEO Emeritus of Deloitte (John Quigley), among others. Those folks are pretty typical of the directors of large corporate boards. None of them are major shareholders.

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