OLYMPIA, Wash. (AP) - Gov. Jay Inslee says Washington must reduce the gap between the pay of an average employee and the salaries of corporate executives, and he has called on the State Investment Board to help accomplish that goal.
One of the main responsibilities of the board, a state agency not often a point of contention between lawmakers, is to invest and manage the retirement money of public employers and employees such as teachers, police officers and judges. The board manages $103.4 billion in assets right now, according to its website.
As a shareholder in companies, the board can vote against the salary of an executive if it’s out of line with how well the company performs financially, said State Treasurer Jim McIntire, a Democrat and one of 10 voting members of the board.
But Inslee, in his State of the State speech Tuesday, asked the board to go further and use its voting power to “reduce the widening pay gap between CEOs and their workers.”
McIntire said Wednesday he believes stagnant wages of average employees are a “significant problem in the U.S. economy,” but he said the board only considers voting against the salaries of corporate executives if it would negatively affect its investments. The board has voted against an estimated 17 percent of “compensation proposals” for CEOs since 2010, he said.
The board probably won’t review its policies and voting guidelines based on Inslee’s speech, McIntire said. “It’s a public comment, and we always take into consideration the public comment we get,” he added.
Senate Majority Leader Mark Schoesler, R-Ritzville, was quick to oppose Inslee’s suggestion in a news conference Tuesday. He said it was the first time he had seen a governor politicize the State Investment Board.
“Now the work of the State Investment board is not exciting, but it’s very critical,” he said. “We have always worked hard to keep politics out of investing, so that they do the best job for the trustees.”
The investment board has previously acted with politics in mind. It had policies of not making direct investments in Iran beginning in 2008, Sudan in 2007, or in companies with business in those countries, according to staff at the board. A 2012 resolution regarding Iran said that if the board was already involved with a company doing business in Iran, it would urge the company to “suspend or curtail” its operations there. A separate 2012 resolution regarding Sudan noted the deadly conflict in Sudan’s Darfur region. Both policies expired in 2014.
Rep. Timm Ormsby, D-Spokane, is one of two lawmakers who vote on the investment board. He echoed McIntire’s statements about the board making decisions based solely on financial impact to investments. But said he appreciated that Inslee is paying attention to the gap between salaries of CEOs and their employees.
In August 2015, the U.S. Securities and Exchange Commission set new rules that require public companies to disclose the ratio of the salary and benefits of their CEOs to the median compensation of the rest of their employees. McIntire said the board will be using data from the rules to inform its investing.
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