At the Senate
Banking Committee hearings on the nomination of SEC-Chair designate Mary Jo
White, Senator Robert Menendez (D-NJ) urged the SEC to expeditiously adopt
regulations implementing the CEO pay ration provisions of Section 953(b) of the
Dodd-Frank Act. Senator Menendez noted that, while there is no
deadline by which the regulations under Section 953(b) must be finalized, some
companies are against it claiming it increases compliance costs and is overly
burdensome.
Senator Menendez has written two letters to the SEC
urging strong and quick implementation of the Section 953(b) regulations. While
comprehensive data will not be available until Section 953(b) is implemented,
noted Senator Menendez, there is no question that CEO pay is soaring compared
to that of average workers. In 2010, large company CEO pay had skyrocketed to
319 times the median worker’s pay, according to the Bureau of Labor Statistics.
A company’s treatment of their average workers is not
just a reflection of their corporate values, reasoned the Senator, but is also
material information for investors.
Section 953(b) requires disclosure of the median of the
annual total compensation of all of the company’s employees, except the CEO, as
calculated in accordance with Item 402(c)(2) of Regulation S-K, the annual
total compensation of the CEO, and the ratio of the median annual compensation
of all employees to the CEO’s compensation. In the 112th Congress,
the House Financial Services Committee reported out a bill that would have
repealed Section 953(b), but the Burdensome Data Collection Relief Act, H.R.
1062, was never passed by the full House and never taken up by the Senate.
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