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Dec. 17 — Senate Democrats want the SEC to finish its rule that would require public companies to disclose the ratio of their chief executive's compensation compared to their other employees'.
Sen. Robert Menendez (D-N.J.), who pushed for the disclosure to be part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and 14 other members of the Democratic caucus signed a Dec. 16 letter to Securities and Exchange Commission Chairman Mary Jo White asking for swift action on the proposed rule.
“In particular, we ask for your commitment to bring this rule before the Commission for a vote before the end of the first quarter of 2015,” the letter states. The signers included Sens. Jack Reed (D-R.I.), Elizabeth Warren (D-Mass.) and Dick Durbin (D-Ill.).
White said she had hoped to finalize the rule by the end of 2014, but that is looking increasingly unlikely.
Several influential House Republicans wrote the SEC in November asking for the rule to be delayed in favor of other initiatives.
Dodd-Frank § 953(b) requires the SEC to write a rule mandating that companies disclose “the median of the annual total compensation of all employees of the issuer, except the chief executive officer,” along with the CEO's pay and the ratio of the two.
“Pay ratio disclosure helps investors evaluate the relative value a CEO creates, which facilitates better checks and balances against insiders paying themselves runaway compensation,” the letter states. “When a company’s performance improves but only the CEO is rewarded, for example, investors should know, so they can ask what kinds of incentives this creates for the company’s future performance.”
The proposed rule received more than 128,000 public comments after it was proposed in September 2013.
“The fact that the simplest of all the 400 Dodd-Frank rules remains delayed typifies the political indecision of the SEC chair,” Bartlett Naylor, a financial policy advocate at Public Citizen, told Bloomberg BNA.
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The letter is available at http://www.menendez.senate.gov/download/?id=0221B510-93B9-40D3-B8E0-E8E34B43AEB9.
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