Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Sec Votes to Require Firms to Disclose CEO Pay Ratios

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Sec Votes to Require Firms to Disclose CEO Pay Ratios

Article excerpt

WASHINGTON -- The Securities and Exchange Commission on Wednesday approved a plan that would require companies to disclose how much more their chief executives are paid than their other employees, advancing an initiative that has been years in the making.

The panel's two Republican commissioners -- Daniel Gallagher and Michael Piwowar -- voted against the proposal, siding with business groups that cast the initiative as a costly burden that is of little use to shareholders. They said the proposal is an attempt to shame corporations into reining in executive pay, by forcing companies to calculate compensation in a way that is designed to yield eye- popping results.

The three Democrats supported the proposal, including SEC chairwoman Mary Jo White. They said it lifts some of the potential burdens cited by corporate lobbyists and fulfills the agency's obligation to carry out a long-overdue mandate imposed by the 2010 Dodd-Frank financial overhaul measure.

The mandate requires public companies to report their chief executives' total compensation, the median compensation of all other employees and the ratio between the two. Supporters say the disclosures will help shareholders make more informed decisions and correct out-of-whack disparities in pay that sparked public outrage during the financial crisis. Wall Street pay during that time encouraged risk taking that nearly brought down the financial system.

Corporate lobbyists have launched a fierce battle to water down or scuttle the initiative. Multinational corporations said it would be tough to gather pay data for employees spread across several nations, citing currency fluctuations and different compensation and benefits systems and policies. Smaller firms have argued that high staff turnover posed complications, and that the number-crunching would drain limited resources.

To address some of those concerns, the SEC proposal would not require companies to calculate the pay and benefits of every employee. Instead, corporations could use any reasonable method to determine median pay, including statistical sampling, which would allow them to gather information for only a fraction of their workers. …

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