Corporate Groups Seek SEC Roundtable on Pay Ratio Disclosure – Ted Allen (ISS Governance blog)
February 9, 2012
“A coalition of corporate organizations has asked the U.S. Securities and Exchange Commission to hold a roundtable before proposing rules to implement the CEO-employee pay ratio disclosure mandate of Section 953(b) of the Dodd-Frank Act. In a Jan. 19 letter to SEC Chairman Mary Schapiro, the groups state: ‘while compliance with the pay ratio provision may seem straightforward, there are significant hurdles and burdens faced by the business community in attempting to comply with it . . .There is a widespread misperception that this information is readily available at the touch of a button. This could not be further from the truth.’ The business groups, which include the U.S. Chamber of Commerce, the Business Roundtable, and 21 other organizations, point out that there is no explicit deadline for the SEC to finalize rules, and thus urge the agency to “resist rushing into proposing regulations, given the substantial cost and implementation burdens that are likely to be imposed on companies.’ In response, the Americans for Financial Reform (AFR), a group that includes the AFL-CIO and other supporters of Section 953(b), argues that the business coalition’s request for a roundtable is an attempt ‘to stifle the rule, not to enhance the rulemaking process.’ ‘Section 953(b) is a simple, straight-forward disclosure requirement, and the prescriptive language of the law should facilitate the Commission’s rulemaking process. The Commission has already delayed issuing the regulation once. Further delays are unwarranted,’ AFR wrote in a Jan. 25 letter to the SEC. AFR and other supporters of Section 953(b) argue that it will provide investors ‘with needed information to restrain runaway levels’ of executive compensation. ‘The ratio of CEO to median employee compensation is material information for investors because high pay disparities can harm employee morale and productivity. Moreover, excessive pay packages can create incentives for top executives to take on excessive risk at the expense of the long-term stability of their corporations,’ AFR stated.” Click here for more.