SEC Approves CEO Pay Rule

The US Securities Exchange Commission (SEC) voted to adopt a new CEO-Worker Pay Ratio Rule at its August 5 Meeting, passing the rule mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act (five years later).

The Washington Post put it clearly:

The Securities and Exchange Commission on Wednesday made it official: Public companies will soon have to say exactly how their chief executives' payday compares with a typical employee’s.  In a 3-to-2 vote, the commission backed a long-delayed rule demanding that companies publicly share their "pay ratio," a potentially embarrassing corporate revealing that will highlight the country's growing workplace pay gap.  Calling it "one of the most controversial rules" to arise out of the sweeping Dodd-Frank reform following the financial crisis, the rule's approving members, including SEC chair Mary Jo White, called it a thoughtful and reasonable measure that would help investors and workers better understand how companies reward both sides of their workforce.

This victory for working people did not come easy.  A labor-led coalition that included CREDO Action,, Americans for Financial Reform and Public Citizen delivered petitions signed by 165,000 Americans in July of 2015.  As Heather Slavkin Corzo, the AFL-CIO Director of the Office of Investment said at the time: “It’s been five years since this proposal was passed under the Dodd-Frank Wall Street Reform and Consumer Protection Act, but no action has been taken to enforce it. The time to implement this proposal is long overdue and the American people are tired of waiting.” 

For AFL-CIO President Richard Trumka’s response, see:

For the Post’s full article:

Read the official press release from The Securities and Exchange Commission:


Workers of America: You're Welcome!

In our previous blog post, we discussed the recent SEC Commission approval of the CEO Pay Rule. Here we discuss Heartland's contribution to the effort.

As the Washington Post reported, two of the SEC's commissioners "belittled the rule as an easily misconstrued burden built to embarrass big businesses. Commissioner Michael Piwowar called it "a page out of the playbook of Big Labor.”  What is the Big Labor Play Book?  The Commissioner blamed it on Heartland’s very own Working Capital: The Power of Labor’s Pensionspublished in 2001 by Cornell University Press.


The CEO pay rule came about after the blowback from the 2008 financial markets collapse, the worst since the Great Depression. Nearly $11 trillion in household wealth vanished, including $4 trillion in retirement accounts and life savings. In addition, millions of jobs were lost and homes were foreclosed, and resources were diverted from important issues such as education, infrastructure and climate change, among many other negative effects.  

While some institutional investors recovered, through lawsuits, a small portion of the losses caused by Wall Street’s financial engineering mistakes and blatant frauds, the US government and SEC were famously inept at punishing the illegal actions by bank and investment officials.  In all, our federal and state governments recovered a paltry $130 billion from the largest US banks for their actions as of April 20, 2015, according to the Wall Street Journal.



It took a five-year political fight supported by a broad reform coalition to eventually win this compromise version of the rule.  But this Commissioner blamed it on our little book from 15 years ago.  Here’s what he said:

The push for pay ratio disclosure should come as no surprise to anyone familiar with the use of Saul Alinskyan tactics by Big Labor and their political allies. Nearly fifteen years ago, Big Labor supporters published a book called Working Capital: The Power of Labor’s Pensions that contained a strategy to re-make the capital markets with a so-called “worker-owner” viewpoint. The worker-owner approach would aim to '"inject workers’ welfare, broadly understood, into investment priorities' and depart 'from conventional investment wisdom by expanding the options, methods, and principles that guide capital allocation." As one editor of "Working Capital" later said, "[t]hese decisions need not be driven by a solitary logic of return-seeking. . . . Other goals, values, and methods can, and should, come into play."…This pay ratio rulemaking is literally a page from that Big Labor playbook…


Fiduciary Duty in the 21st Century

UN PRI Fiduciary Report

RI Guidebook Presentation


 Presentation on the Responsible Investor Guidebook:

“Embedding pro-labour practices & policies for responsible investment”

Global Trade Unions

Committee for Workers’ Capital (CWC)

London, September 8, 2015

 The Ongoing Damages of Financialization

The 2008 financial market crash was one manifestation of the instability caused by the “financialization” of the economy, according to Frederick Hanin, a Laval University professor who wrote a report on Heartland.  At the macro, meta and micro level of the economy, working families and communities absorbed the risks of financial experimentation, suffering tremendously. Fallouts from the casino-fueled 2008 crash were horrific: millions of lost jobs, $11 trillion in lost assets and pensions, ravaged wages and benefits, and increased debts for working Americans. The poverty level among Americans rose while retirement savings for working people fell dramatically. The bank bailouts crowded out real stimulus contributing to deficits and austerity programs across the US.

Unfortunately, for industrial workers, this was but one more crisis.  The Heartland Labor/Capital Network was formed by the Steelworkers, the AFL-CIO and my organization, the Steel Valley Authority, a USW affiliate, in 1995 to reclaim control of workers capital and rebuild our industrial community.  The SVA was composed of milltowns in the heart of steel country that lost 150,000 manufacturing jobs since the 1980s, and we lost half of our population, like many rust belt towns.  Heartland has commissioned a number of important books on labor’s capital strategies.

Today, Heartland Capital Strategies (HCS) fosters a “Community of Practice” for responsible economic impact investments (EII) to rebuild the built environment, revitalize the industrial commons and grow the clean economy.  Heartland was commissioned by the AFL-CIO, the USW and other sponsors to write the Responsible Investment (RI) Guidebook.  I wanted to note the very powerful contributions of the ITUC CWC to the growing literature of responsible investment and good corporate governance in this endeavor, as we borrowed heavily from your many reports on the subject.

Tom Croft presenting at 2015 CWC

Our charge was to write a handbook to implement AFL-CIO Resolution 11, passed at the 2013 AFL-CIO Convention in Los Angeles.  The purpose of the new book is to illustrate how the investment of workers’ capital assets, such as pension and institutional funds, can be targeted to generate specific ESG benefits along with competitive financial and economic returns. The Guidebook is co-authored by Annie Malhotra, CFA, a consultant with impact investment and mainstream finance experience, and myself.



©2015 Heartland Capital Strategies