Section 953(b) of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act requires publicly traded companies to disclose the ratio of CEO pay as a proportion of the median-paid employee at the firm. And yet, the Securities & Exchange Commission has yet to even propose a regulation for public comment, which would get the ball rolling on enforcing the act. So more than two dozen members of the Congress and Senate have written the SEC asking the agency to act immediately.
From the letter sent to SEC Chair Mary Schapiro:
[I]ncome inequality is a growing concern among many Americans. Incomes at the very top have skyrocketed while workers’ wages and incomes have stagnated. In fact, over the last decade, median family income actually fell for the first time since the Great Depression. And while comprehensive data will not be available until this provision takes effect, there is no question that CEO pay is soaring compared to that of average workers. In 1980, CEOs of larges U.S. companies received an average of $624,996 in annual compensation, or 42 times the pay of typical factory workers. But by 2010, large company CEO pay had skyrocketed to $10.8 million, or 319 times the median worker’s pay.
Companies that have opposed the regulation say that it would somehow be difficult to figure out the median pay of their staff. But the lawmakers point out that even the SEC’s former chief accountant says this should not be too complex a calculation for a business to make.
“Such claims either constitute an embarrassing confession about widespread mismanagement of a central financial issue, or a disingenuous smokescreen,” writes Public Citizen’s Bartlett Naylor. “The idea that firms have no idea what they pay their staff is ludicrous.”
Lobbyists have reportedly spent in excess of $4.5 million trying to have this provision swept under the rug. But after a year and a half of no action, here’s hoping that the renewed attention from lawmakers will be the kick in the butt the SEC needed.