Twenty congressmen signed onto a letter, penned by Rep. Keith Ellison, D-Minn., asking the Securities and Exchange Commission (SEC) to get to work on rulemaking surrounding disclosure requirements for CEO compensation.
Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act requires the disclosure by public companies of the ratio between the compensation of their CEO and the typical worker at that company.
“The Wall Street Reform Act was passed nearly a year and a half ago, but the SEC has failed to act on this required rulemaking thus far,” Ellison said in his March 7 letter to SEC Chairman Mary Schapiro. “As you are aware, income inequality is a growing concern among many Americans. Incomes at the very top have skyrocketed in recent years while workers' wages and income have stagnated. In fact, over the last decade, median family income actually fell for the first time since the Great Depression.”
Ellison noted that while comprehensive data is not yet available, anecdotal evidence has shown that CEO pay is soaring compared to that of the average work.
“A company's treatment of their average workers is not just a reflection of their corporate value system, but is material information for investors,” Ellison said. “Several companies already calculate such figures for public disclosure, and a number of investors have requested information similar to what Section 953(b) will reveal, but companies have denied it. Some companies have publicly voiced their concern with the calculation of these figures. In our view as well as that of the testimony of Lynn Turner, former Chief Accountant of the SEC this calculation should not be difficult for any well-organized company.
Ellison and his co-signers called for the rulemaking for compensation disclosure to be prioritized on the SEC agenda.