by Senator Mark Leno

With most of the attention focused on the rising level of CEO pay while executives are actively working, an even more important aspect of executive compensation has been overlooked. What a top corporate executive makes when he or she retires from a publicly traded corporation is an ongoing expense to the company every year for the rest of their lives, as opposed to their yearly pay, which is a one-time payment.

Many people don’t realize that over the course of the last few decades, corporations have essentially spiked their top management’s retirement pay as they exit, adding bonuses, stock options, perks and other incentive compensation to their retirement benefit calculations, exponentially increasing the total amount of money they will receive once they are no longer providing any services to the company. This has occurred at the very same time these corporations have restructured and eliminated pension benefits for average workers, and as public pensions are decried as exorbitant and unsustainable.

This has all been done under a cloak of darkness, as there is no requirement for companies to disclose how much a retired executive actually receives once they retire. All the Securities and Exchange Commission currently requires is an estimate, often severely low-balled by company accountants, of what an executive might make once they retire. No reporting is required once they actually do retire. Without this disclosure, the obligations of publicly traded corporations to pay these benefits are essentially concealed from the public and from the shareholders who own the company. What has occurred is a massive run up in unfunded liability at a time when our economy can least sustain it.

To bring some sunshine into the uncharted realm of retirement pay, I have introduced SB 1208, the Corporate Executive Retirement Sunshine Act, which will require corporations operating in California to annually report to the California Secretary of State how much their top five most highly compensated retired executives are paid, including all compensation, shares issued, options for shares granted, similar equity-based compensation, perquisites and personal benefits.

The bill was inspired by Wall Street Journal investigative reporter Ellen Schultz’s book, Retirement Heist: How Companies Plunder and Profit from the Nest Egg of American Workers. It contains hundreds of examples of how companies have raided previously overfunded pension plans to boost earnings and provide golden parachutes to executives while eliminating pension and health benefits for average workers. This video clip of her being interviewed recently by John Stewart demonstrates the scope of the problem.

A great deal is at stake for working Californians. Retirement security is central to maintaining a strong workforce and middle class. As workers lose retirement benefits, they must rely more heavily on public institutions for support, including assistance with housing, transportation, and health care. If companies cannot sustain the level of benefits they have promised their top retirees, and those companies experience financial hardship or go bankrupt, taxpayers will be called upon to bail them out and our unemployment rolls will swell.

The erosion of pension security that has occurred over the same time that executive retirement pay has dramatically increased has amounted to a shifting of responsibility for the welfare of Americans from corporations to taxpayers. For these reasons, California has every right to peek under the closed tent of retirement pay. We will be shocked by what we see.

SB 1208 will be up for a vote on the Senate floor as early as this Tuesday. A number of moderate Democratic Senators have not yet committed to supporting it. Please contact them early Tuesday morning before the vote to make sure they understand how important this issue is. Go to www.senate.ca.gov for a list of room numbers, phone numbers and e-mail addresses, and make your voice heard.

This article originally appeared on the California Labor Federation’s blog, Labor’s Edge.