Overture calls for limits on corporate pay in U.S. By John H. Adams The Layman Online Wednesday, June 2, 2004 The Presbytery of New Hope in North Carolina has decided that, in an "ideal relationship," the chief executive officer of a corporation should make no more than 200 times the average of the salaries of the non-supervisory employees. The presbytery's overture to the 216th General Assembly didn't describe how it concluded a 200-1 ratio constituted an ideal relationship. But according to that formula, the chief executive of a corporation whose non-supervisory employees averaged $30,000 a year should be paid no more than $6 million a year. Some executives might be able to cope with such a salary, even though, according to Overture 04-04, the figure should include all compensation – pay, cars, stock options, tickets, country club memberships, etc. The overture has two purposes: 1) to nag corporations about their rich executives and 2) try to persuade corporate boards to adopt the 200-to-1 standard. If the General Assembly approves the overture, the denomination's corporate business lobby, which is part of an ecumenical movement, will try to influence shareholders' resolutions calling for decreases in executive pay. Beyond that, the denomination could call for a boycott of goods and services produced by corporations whose executives are overpaid, according to PCUSA standards. But that's where it gets sticky. Many corporations that sell goods and services that are in great demand pay their executives far more than the 200-to-1 limit. And shareholders endorse the multi-million-dollar pay packages if their stock values and dividends increase. The New Hope overture parallels a movement sponsored by the AFL-CIO seeking to reduce executive pay and cool down free market competition for talented executives. The AFL-CIO maintains a database that includes 2002 compensation figures for hundreds of executives. The text of the New Hope overture: Overture 04-12. On Setting Compensation Standards – From the Presbytery of New Hope. The Presbytery of New Hope overtures the 216th General Assembly (2004) of the Presbyterian Church (U.S.A.) to do the following: 1. Set as an ideal relationship between the total compensation for the highest paid employee (CEO) and the average of the salaries of the non-supervisory employees as no more than 200 to 1. 2. Instruct its investment committee to initiate stockholder resolutions on the floor of all corporations in which the Presbyterian Church (U.S.A.) holds shares, a motion to establish such a limit of not more than 200 to 1 between the highest paid employee's (CEO) pay and the average of the non-supervisory employees' salaries. A limit of not more than 200 to 1 would include the total compensation (stock options, retirement benefit, cars, tickets, country club memberships, etc.) of the highest paid employee (CEO) and the average salary of the non-supervisory employees total package. Rationale In the free enterprise system, in the for-profit economy, the relationship between capital, management, production, sales, and employees can become distorted and unjust. The mission of the Presbyterian Church (U.S.A.) has been expressed as expressing the love of God for all people by seeking to engage in the struggle to free people from sin, fear, oppression, hunger, and injustice; to minister to those who are poor and powerless. One acknowledged manifestation of evil in the world is greed. Scripture invites Christian people to free our hearts from the love of wealth. It is a matter of fairness, a matter of justice, a matter of equity of value for individuals and their contribution to the good of society that workers and management deal with each other in an open and honest way. The Prophet Amos and others call society into account for the mistreatment of workers, widows, and the poor. The current relationship between corporation executives and non-supervisory employees has become excessively out of balance. During the decade of 1990 to 2000, the average CEO pay went up 463 percent compared to the rise in the average worker's pay increase of 42 percent.¹ During the decade of 1990 to 2000, the ratio of CEO to worker pay is nearly 411 to 1, which is now ten times larger than it was in 1982.² There appears to be no relationship of the CEO payment to the value contributed: from January 1, 2001, until July 31, 2002, CEO's whose compensation totaled more than $1.4 billion saw the value of their companies' shares plunge by 73 percent of their total value.³ During 2001, the CEO's, whose own salaries increased the most, were responsible for the firing of more than 162,000 employees.4 As stealing is the taking of that which does not belong to you, many of the CEO's have stolen from retirees and others the value of their company, the value of their retirement, and the value of their trust in the economy. Some of these compensation rewards were given to upper management at the same time that concessions were being requested from labor in order to avoid bankruptcy of the corporation – in acts of deceit and dishonesty. Endnotes 1. Scott Klinger and Chris Hartman from United for a Fair Economy; Sarah Anderson and John Cavanagh from Institute for Policy Studies; and Holly Sklar. Executive Excess 2002: CEOs Cook the Books,. Skewer the Rest of Us. August 26, 2002. Downloaded from the Internet, www.stw.org/press/2002/EE2002.pdf. This fact was taken from a graph on p. 17. 2. Ibid., p. 4. 3. Ibid., p. 4. 4. Ibid., p. 4.

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