> Fellow TIAA-CREFERs, > > I sent the proposal below and accompanying justification to > the Board of TIAA-CREF, to be considered for their next proxy > statement. The purpose is to have TIAA-CREF work towards placing > serious restrictions on the compensation of top corporate > executives. At present CEOs of major corporations often earn more > than $10 million per year, and sometimes more than $100 million per year. > There is no justification for such outrageous salaries. > > To have this proposal accepted as a ballot resolution the > Board has to be convinced that this issue would be of interest to > TIAA-CREF members. Some supporting letters would be very helpful in this > respect. I would appreciate any letters that people could send to the Board > at the following address: > > Secretary, Board of Overseers > TIAA-CREF > 730 3rd Ave. > New York, NY 10017-3206 > > Also any help in circulating this note via computer networks, fax, or more > primitive means would also be greatly appreciated. > > > Thanks, > > Dean Baker > Economic Policy Institute > 1660 L St., NW > Washington, DC 20036 > (e-mail: [EMAIL PROTECTED]) > > > > TIAA-CREF should actively work to have limits placed on > individual executive compensation packages in any corporation in > which it holds a financial interest. This limit should not exceed > 150 times the median annual wage in the U.S. economy (currently > about $20,000 per year). This limit is to include salaries, > benefits, bonuses, and the value upon redemption of any stock > options included in a compensation package. The value of the latter can be > averaged over the years for which it was earned (rather than just the year > of redemption). The amount by which redeemed stock options push average > compensation over this limit should revert back to the corporation. > > TIAA-CREF should attempt to have such limits imposed through > discussions with corporation officers and directors, and other > shareholders, and through proposing and supporting proxy > resolutions to this effect. It should report back to members each > year on its progress in having such limits accepted in its annual > report. > > There are several reasons why this proposal should be in the > interest of TIAA-CREF members. First, and most obviously, executive > compensation comes directly out of revenue that otherwise could provide an > additional return to shareholders. Compensation for top executive officers > has grown far more rapidly than compensation for other types of work other > last two decades. Since there is no reason to believe that the demand for > the skills of these executives has increased dramatically relative to other > occupations, or that the supply of these skills has decreased dramatically, > this rise in compensation is most likely attributable to a market failure. > Specifically, the shareholders of firms have failed thus far to place > sufficient downward pressure on the compensation of these officers. Since > the compensation of top executive officers vastly exceeds the compensation > for other occupations requiring comparable levels of skill, there is good > reason to believe that a concerted effort by major shareholders can lead to > lower compensation levels without any reduction in the quality of the > performance of these officers. > > A second reason to support executive compensation caps is that in the > long-run it will probably lead firms to be more productive, since workers > are likely to feel more committed to a firm if they believe they are being > treated fairly. At present, some packages have become so bloated that the > per hour compensation of a chief executive can exceed the yearly > compensation of a typical worker. It is hard to believe that this degree of > inequality can be consistent with a sense of fairness for workers. In the > long-run this inequality would almost certainly undermine any sense of > loyalty and commitment among workers. It is worth noting in this respect, > that the degree of inequality between executive officers and other workers > is far lower in every other western nation. > > > A third reason why TIAA-CREF members should support this > resolution is that the high salaries available to corporate > executive officers are increasingly affecting salary structures in other > institutions. The institutions where this is most directly relevant is at > colleges and universities. Compensation packages for college and university > presidents have risen far more rapidly than the average compensation levels > for the faculty as a whole. These compensation packages are often justified > by reference to the high compensation received by corporate executives. The > same situation has arisen in other institutions, including at TIAA-CREF > itself. If some discipline can be placed on compensation packages for top > corporate executives, it is likely that it would place downward pressure on > the pay of the top officers in other institutions that directly affect the > lives of TIAA-CREF members. > >
