March 16, 2018
With pay ratio disclosures generating headlines nationwide, Sen. Bernie Sanders (D-VT) penned a letter to Secretary of Defense James Mattis demanding the Pentagon take immediate steps to address "[t]he obscene executive compensation packages of some of the largest defense contractors in this country" and threatening to introduce legislation which would cap executive compensation at major defense contractors. Sen. Sanders' letter does not directly cite the disclosed pay ratio of any of the major defense contractors, two of which he specifically calls out by name. However, Sen. Sanders does compare the pay of Secretary Mattis as well as members of the military to the CEO pay of major defense contractors. According to Sen. Sanders, the high CEO pay levels and disparity of defense contractors fuels a "revolving door between defense contractors and the federal government" while sending signals that the contractors themselves "do not have to be accountable" to the DoD, and that military service is not as valued as working for a defense contractor. More importantly, however, Sen. Sanders discusses the existing law that caps the reimbursable expense for executive compensation at U.S government contractors, which was signed into law by President Obama five years ago. Sen. Sanders views the fact that the reimbursement cap does not apply to fixed-priced contracts as creating a loophole allowing "defense contractors  to pay executives whatever they want as long as they don't seek reimbursement from the federal government" above the cap. Pointedly, Sen. Sanders asks Secretary Mattis whether the law should be amended to cap the executive pay of defense contractors, even though many have divisions that generate non-governmental revenue as well. Sen. Sanders also demands a list of "recommendations on reducing excessive defense contractor compensation, and what steps, if any, DoD is taking to address this issue."