Portland Seeks to Limit CEO Pay

One city is making the fight against income inequality personal.

With an October proposal, Portland, Oregon is set to become the first city in the country to penalize companies whose CEOs earn substantially more than their regular employees. Specifically, if the ratio of compensation between a company’s chief executive and median worker is 100:1 or more, the company will owe an additional 10 percent in city taxes. 

A 2016 study conducted by the Economic Policy Institute found that CEOs earned 276 times more than the average worker. 

The ordinance, if enacted, would only apply only to publicly traded companies. A 2015 Securities and Exchange Commission rule already makes it mandatory for these companies to disclose their CEO-employee pay ratios. In addition to giving shareholders a “say on pay,” that rule was also designed to provide local policymakers with an opening to penalize or reward companies for their pay equity.

The city council is expected to vote on the proposal in December. If approved, the ordinance would generate an estimated $3.5 million in annual revenue for the city. While only time will tell if Portland kicks-off a broader trend, San Francisco may already be drafting its own version according to former US Secretary of Labor Robert Reich.