Lawmakers make laws. They don’t enforce them. Corporate America understands that difference — and exploits it with a relentless regularity. The latest case in point: the battle over outrageous CEO pay.

By Sam Pizzigati

Towers Watson, the corporate consulting powerhouse, last week shot out to clients a cheat sheet for dealing with that “unflattering headline about your company’s executive pay.”

This coming spring, the Towers Watson advisory counseled, be prepared for news articles that may “mislead the reader into thinking” that your corporate board is taking “actions that are not in shareholders’ best interests” — articles with headlines like “CEO Pay Rises Dramatically in 2011.”

The Towers Watson warning could hardly be more timely. The new annual CEO compensation reports will start appearing late next month, and all signs are pointing to another big corporate executive pay uptick, maybe as much as the 36.5 percent pay hike for top 500 CEOs reported for 2010.

Few analysts had expected this latest surge in executive pay. Two years ago, after all, lawmakers in Congress had written into law a series of curbs on corporate executive pay practices, as part of the widely celebrated Dodd-Frank Wall Street Reform and Consumer Protection Act.

Dodd-Frank’s executive pay provisions give shareholders more information — and say — over executive pay decisions. And they give regulators much more authority to quash lavish incentives that encourage reckless executive behavior.

So what went wrong? Why hasn’t Dodd-Frank slowed the CEO pay spiral? Is Dodd-Frank’s approach to CEO pay reform somehow fatally flawed?

No one really knows — for a simple reason. Dodd-Frank’s most far-reaching CEO pay provisions still haven’t gone into effect.

Who deserves the blame for this perverse state of affairs?

Courts deserve some. Last July, for instance, a U.S. Court of Appeals panel “vacated” a new rule federal regulators had prepared to put teeth into the Dodd-Frank provision that could help dissident shareholders challenge corporate directors who rubberstamp excessive executive pay awards.

But much of the blame rests on federal regulatory agencies themselves. These agencies have been flinching, ever since Dodd-Frank’s passage, under intense corporate pressure. Regulators are dragging their feet and shying away from any real exercise of the new authority Dodd-Frank gives them.

Last week, a U.S. Senate hearing flashed some light on that flinching.

The Dodd-Frank statute, Columbia Law School’s Robert Jackson told a Senate Budget subcommittee, entrusts in the Securities and Exchange Commission and other federal agencies “unprecedented authority to ensure that bonus practices never again endanger financial stability.”

Under Dodd-Frank, Jackson explained, regulators can “prohibit any bonus that gives bankers excessive pay.” But an initial set of Dodd-Frank regulations that federal agencies proposed last April, he noted, don’t even prohibit the most brazen of financial executive greed grabs, the “hedging” that financial executives do against their own company’s stock.

Executives hedge by placing bets in derivative markets that their firm’s share value will plummet — at the same time they’re stuffing their pockets with pay incentives to raise that value up ever higher. Hedging along these lines helped AIG insurance chief Hank Greenburg to $250 million when AIG collapsed in 2008.

On other Dodd-Frank executive pay provisions, the SEC and other federal agencies haven’t bothered to issue weak regulations. They’ve issued no regulations at all. The most glaring example: Dodd-Frank’s now infamous — in corporate circles — section 953(b).

This obscure Dodd-Frank provision, guided into law by Senator Robert Menendez from New Jersey, requires corporations to annually reveal their CEO pay, the pay of their median employee, and the ratio between the two.

Menendez had a simple goal in mind. He wanted all shareholders — and all Americans — to know how much individual CEOs make as a multiple of what their typical workers take home. Corporate boards of directors do not currently have to reveal this information.

Corporate execs and lobbyists didn’t see this Menendez mandate coming. They were too busy working to water down various other elements of the pending Dodd-Frank package to notice. Now they’re mobilizing feverishly to stop the pay ratio disclosure Dodd-Frank mandates.

In the House of Representatives, these power suits have engineered Financial Services Committee approval of a bill that would repeal the Menendez mandate. But that repeal is going nowhere in the current Senate. Corporate America’s plan B: Push the SEC to delay the release of the rules needed to enforce the pay ratio disclosure mandate — until the Senate changes.

Last month, 23 top national business groups — a heavy-hitter line-up that included the U.S. Chamber of Commerce and the CEO all-star Business Roundtable — sent SEC chair Mary Schapiro a letter urging the SEC to “resist rushing into proposing regulations.”

The agency has so far resisted any urge to rush quite nicely. President Obama signed Dodd-Frank into law in July 2010. The spring 2011 annual corporate meetings came and went without any pay ratio disclosure rules on the books. The spring 2012 annual meetings will come and go the same way.

And so might the spring 2013 corporate annual meeting season, since the SEC still hasn’t set any firm deadlines for getting the needed disclosure rules written.

This endless SEC footdragging has public interest watchdogs up in arms. Americans for Financial Reform, an umbrella group that includes the AFL-CIO, is calling the corporate call for more disclosure rule discussion a cynical move “to stifle the rule, not to enhance the rulemaking process.”

Lawmakers supporting pay ratio disclosure are pushing back, too. Representative Keith Ellison, a Democrat from Minnesota, last week began collecting lawmaker signatures for a letter pressing the Securities and Exchange Commission to move forward with dispatch on the ratio rule-writing process.

In 1980, notes Ellison, major U.S. CEOs averaged $624,996 in annual pay, about 42 times the pay of typical American factory workers. By 2010, big-time CEO pay had jumped to $10.8 million, or 319 times median worker compensation.

“Section 953(b) was intended,” says Ellison, “to shine a light on figures like this at each company.”

At last week’s Senate Banking subcommittee hearing, senator Sherrod Brown from Ohio stressed that protecting U.S. taxpayers must mean “putting an end to risky compensation packages that allow Wall Street to reap all the rewards when times are good, but stick taxpayers with the bill when things go bad.”

Not everyone on Capitol Hill agrees. The ranking Republican on the Senate Banking subcommittee that Sherrod Brown chairs, Senator Bob Corker from Tennessee, is feeling no angst about the nonexistent enforcement of Dodd-Frank’s most important curbs on executive pay excess.

Corker last week declared that the Dodd-Frank regulations were “working.” We have “to be careful” on executive pay, Corker added, what with “populism running rampant” and people taking “about the 1 percent and the 99 percent.”

Why do we have to be careful? Any overly enthusiastic clampdown on executive pay, Corker would go on to explain, might have our nation’s finest CEOs pick up their marbles and go someplace else. Warned Corker: “Populism can drive a lot of talent out we want to see in the system.”

The same talent, presumably, that crashed the U.S. economy.

Sam Pizzigati edits Too Much, the online weekly on excess and inequality published by the Institute for Policy Studies. Read the current issue or sign up at Inequality.Org to receive Too Much in your email inbox.