The result has been higher stock prices but not higher living standards for most Americans.
Which doesn't justify sky-high CEO pay unless you think some CEOs deserve it for their political prowess in wangling these legal changes through Congress and state legislatures.
It turns out the higher the CEO pay, the worse the firm does.
Professors Michael J. Cooper of the University of Utah, Huseyin Gulen of Purdue University, and P. Raghavendra Rau of the University of Cambridge, recently found that companies with the highest-paid CEOs returned about 10 percent less to their shareholders than do their industry peers.
So why aren't shareholders hollering about CEO pay? Because corporate law in the United States gives shareholders at most an advisory role.
They can holler all they want, but CEOs don't have to listen.
Larry Ellison, the CEO of Oracle, received a pay package in 2013 valued at $78.4 million, a sum so stunning that Oracle shareholders rejected it. That made no difference because Ellison controlled the board.
In Australia, by contrast, shareholders have the right to force an entire corporate board to stand for re-election if 25 percent or more of a company's shareholders vote against a CEO pay plan two years in a row.
Which is why Australian CEOs are paid an average of only 70 times the pay of the typical Australian worker.
The new SEC rule requiring disclosure of pay ratios could help strengthen the hand of American shareholders.
The rule might generate other reforms as well -- such as pegging corporate tax rates to those ratios.
Under a bill introduced in the California legislature last year, a company whose CEO earns only 25 times the pay of its typical worker would pay a corporate tax rate of only 7 percent, rather than the 8.8 percent rate now applied to all California firms.
On the other hand, a company whose CEO earns 200 times the pay of its typical employee, would face a 9.5 percent rate. If the CEO earned 400 times, the rate would be 13 percent.
The bill hasn't made it through the legislature because business groups call it a "job killer."
The reality is the opposite. CEOs don't create jobs. Their customers create jobs by buying more of what their companies have to sell.
So pushing companies to put less money into the hands of their CEOs and more into the hands of their average employees will create more jobs.
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