SEC approves "pay ratio" disclosure for CEOs

[jpak]

Source: USA Today

The Securities and Exchange Commission Wednesday narrowly approved a new rule requiring publicly traded U.S firms to disclose the gap between CEOs' annual compensation and the median compensation of other employees.

Handing a defeat to business opponents of the change, the 3-2 vote capped a multi-year battle over the so called pay ratio disclosure required by the Dodd-Frank Wall Street Reform and Consumer Protection Act enacted after the national financial crisis.

The outcome came after more than 287,000 comment letters and related meetings as business and other groups called the rule unnecessary and said it would be expensive and difficult to implement, while supporters contended it would help investors make more informed evaluations of corporate governance and so-called say-on-pay initiatives.

"While there is no doubt that this information comes with a cost, the final rule recommended by the (SEC) staff provides companies with substantial flexibility in determining the pay ratio, while remaining true to the statutory requirements," said SEC Chair Mary Jo White.

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Read more: http://www.usatoday.com/story/money/2015/08/05/sec-pay-ratio-disclosure-vote/31112725/

[JudyM]

1. Ok good, but a lot of wiggle room in calculating median pay, including disregarding overseas workers

Gotta say that if this rule is going to be so burdensome, makes you wonder how they can manage to comply with regulations that require doing so much more than calculating a median.

[Psephos]

2. The actual effect will be to push CEO pay toward stock options and equity comps.

Which are not reported as annual pay.

That in turn provides huge incentives to CEOs to direct their companies into stock buyback programs. ZIRP Fed banking policy makes it very easy for corporations to issue nearly unlimited amounts of debt, and use it to repurchase stock in an otherwise brittle and illiquid market. Fake money, fake market, fake politics.

The rich get richer once again due to policy driven by emotions instead of financial understanding.

[Gothmog]

3. This is great news

It has taken forever for these rules to be approved