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 In the 112th Congress, the House Financial Services Committee reported out a bill that would have repealed Section 953(b), but the Burdensome Data Collection Relief Act, H.R. 1062, was never passed by the full House and never taken up by the Senate.