Companies Need to Share More of Their Riches With Workers

For two generations, workers’ wages have stagnated. During this period, powerful institutional investors have tied executive pay to stock performance and created a corporate-governance system solely focused on delivering for stockholders. The bulk of the rewards for improved corporate performance shifted to stockholders and top management, at the expense of other company stakeholders, particularly employees. The result has been soaring inequality, increased economic insecurity and a growing anxiety that our capitalist system is stacked against working people.

Our fraying social compact has led to calls to give workers a stronger voice in corporate governance. Business leaders have even acknowledged that an economic system that doesn't work for everyone is unsustainable, most prominently in the Business Roundtable’s statement last August that the purpose of a corporation shouldn't be just to serve shareholders, but workers as well. We would go further: Revise the mandate of board compensation committees, which have presided over inflating executive pay and diminishing returns to other employees, to make them responsible for overseeing a more equitable pay distribution for the entire company workforce.