We’re at a tipping point in American history where corporate power has become so overwhelming that even some of its past loyal custodians are looking for ways to rein it in. There have been multiple major strikes across completely disparate industries (UPS, The Writers Guild, The Screen Actors Guild, UAW and Kaiser Permanente) because companies have not been investing enough in their infrastructure and workforce. It’s no longer sustainable, and the momentum is currently behind the American worker. That could obviously change because corporate power has a multitude of ways of fighting back. But we’re currently in a moment where the American public realizes that labor needs more power in order to sustain the kind of country most of us want to live in. For instance, the United Auto Workers took a major haircut in 2008, and they recognize that this is a moment, with public sentiment on the side of workers, to strike for a better deal. Both UPS and the Writers Guild have shown how much labor can extract from management when they are organized and have a coherent, well-reasoned and researched set of demands. No, labor shouldn’t expect miracles, but fighting for fair treatment is something that is currently being instilled in millions of Americans. It’s an encouraging sign because, for decades, too many Americans were not aware of unfair or unjust labor practices and, in the year 2023, that is clearly changing. I think most people can agree that this is an extremely positive development. 1.0% and top 0.1% incomes, leaving less of the fruits of economic growth for ordinary workers and widening the gap between very high earners and the bottom 90%. The economy would suffer no harm if CEOs were paid less (or were taxed more). Stock-related components of CEO compensation constitute a large and increasing share of total compensation; realized stock awards and stock options were 73.1% of total compensation in 2016 ($12.6 million out of $17.2 million) and were 83.1% of total compensation ($20.1 million out of $24.2 million) in our sample for 2020. The growth of these stock-related components from 2016 to 2020 was the sole reason total CEO realized compensation grew by $7.0 million from $17.2 million to $24.2 million, up 40.5%. Of the stock-related components of compensation, stock awards make up a growing share while the share of stock options in CEO compensation packages has decreased over time.” As the study indicates, corporations have increasingly tied CEO pay to stock performance. However, as has been proven time and time again, stock performance often doesn’t reflect the health of a company or its workforce. For instance, a company can lay off a large part of its workforce and the stock price will often go up. Or a company can gut some of its key infrastructure and the stock price may improve under the guise of efficiency. A 1982 SEC ruling drastically changed the complexion of our economy and we’re still seeing the fallout today. As an article from Vox discusses, “After the stock market crash of 1929 and the Great Depression, the United States government passed the Securities Act of 1933 and the Securities Exchange Act of 1934 to try to prevent it from happening again. The 1934 legislation didn’t bar stock buybacks, per se, but it barred companies from doing anything to manipulate their stock prices. Companies knew that if they did a stock buyback, it could open them up to accusations from the Securities and Exchange Commission of trying to manipulate their stock price, so most just didn’t. Reagan appointed John Shad to head the SEC in 1981. A former vice chair of a major Wall Street securities firm, Shad was the first financial executive to head the agency in 50 years, and it showed. In 1982, the SEC adopted rule 10b-18, which provides a ‘safe harbor’ for companies in stock buybacks. As long as companies stick to specific parameters — such as not buying more than 25% of the stock’s average daily trading volume in a single day — they won’t be dinged for stock manipulation. Companies have spent trillions of dollars on their shareholders since the 1980s. Over the last 15 years, firms have spent an estimated 94% of corporate profits on buybacks and dividends. Stock buybacks and dividends aren’t necessarily a bad thing; they’re a way for shareholders to reap the rewards of a company’s success. But shareholder primacy, in which corporate boards prioritize maximizing profits and returns to shareholders above all else, has been on the rise since the 1980s — along with a focus on short-term profits instead of long-term stability and success.” 14
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