Nearly 70 percent of respondents to this week’s RBJ Daily Report Snap Poll approve of the Securities and Exchange Commission’s new rule requiring public companies to disclose the ratio of CEO compensation to median worker pay.
Only a slim majority, however, expect the overall impact of the new disclosure rule to be positive.
The SEC last week approved a final rule requiring public companies to disclose the ratio of CEO compensation to median worker pay. The measure, part of the 2010 Dodd-Frank law, has been highly controversial—the SEC received nearly 300,000 comments since the proposed rule was outlined two years ago.
Smaller reporting companies—those with less than $75 million in public shares held externally or less than $50 million in annual revenue—are exempt from the disclosure, which will start with fiscal years beginning on Jan. 1, 2017, or later. The rule also contains provisions designed to lower the cost of compliance; for example, companies can use statistical sampling to determine median employee pay and they will need to recalculate the ratio only every three years.
Supporters of the rule say it will help rein in excessive CEO compensation and provide shareholders with important information about how corporate money is being spent. Opponents include the U.S. Chamber of Commerce, which in a statement said “at best, pay ratio is a misleading, politically-inspired, and costly disclosure that fails to provide investors with useful, comparable data.”
Some companies such as Noble Energy Inc. and Whole Foods Market Inc. already disclose pay ratios in their annual SEC filings on a voluntary basis.
Nearly 570 readers participated in this week’s poll, conducted Aug 10 and 11.
Do you approve or disapprove of the SEC’s new rule requiring public companies to disclose the ratio of CEO compensation to median worker pay?
In your view, what is the overall impact of the SEC’s new pay-ratio disclosure rule likely to be?
Very positive: 20%
Somewhat positive: 31%
Somewhat negative: 18%
Very negative: 15%
For information on how the Snap Polls are conducted, click here.
Hiding such information is more detrimental to good public relations than disclosure. When the truth is held back, imaginations soar.
More government intrusion in the free enterprise system.
No single individual deserves to earn the kind of multiple of median company earnings unless they also risk lower earnings based upon overall company performance. Most companies depend on the performance of many teams of individuals in order to be successful. We tend to give too much credit to the top few.
—Ray Hutch, board chair, Synergy Global Solutions
Next let’s disclose the ratio of pay of the commander in chief to a private or even a sergeant, the two guys who actually do the risking of their lives. Let’s also do the disclosure of the ratio of the effectiveness of each. Both disclosures would be meaningless, although maybe fun.
This is a simple request and not difficult to provide. It allows investors to evaluate the real value of leadership in relationship to the return on investment and how well the reward their employees who are the ones who truly provide the return. The CEO may set direction, but the players are the ones who execute. CEO compensation has far outpaced their value. Great leaders recognize the contribution of the company employees and don’t get wealthy on their backs.
There is no value to this regulation. Another political move to regulate our lives; what does it prove? If stockholders want to know how money is spent, read the quarterly and annual reports.
It’s meaningless. Why not compare individual NFL football players’ compensation with the ticket prices or the average compensation of the fans (ticket holders) who pay their salaries?
How in the world could government impose compensation restrictions on the private sector? I call (this) “bs.” This country was found on defiance of control. It is time to dust off our complacency and put government in its place—subservient to the constituents. This is the same SEC that was in charge of policing the financial institutions when they collapsed and then colluded with massive payouts on the taxpayers’ backs. The SEC as we know it shouldn’t even exist, much less dictate policy. The scumbags in charge from 2007-2010 should be in prison right now.
All the information an investor needs regarding executive compensation is already available for publicly traded companies. The pay ratio is simply a new tool for politicians to grandstand on and create contempt for non-union companies. It is part of the Obama culture to further divide the country.
—Carlo Jannotti, Vermonix
Yes, some CEOs are clearly overpaid, but others create large numbers of jobs and wealth for the communities they operate in. If an individual does not like how a company is run or their policies, they do not have to work for that company. I am one of those people who gets nervous when the government starts to tell companies and individuals how to use or spend their money.
I am one of the (many) middle-class workers whose wages have stagnated for four years while the executives around me have rewarded themselves with raises, bonuses, stock options and enhanced retirement benefits. At a younger age, I thought market influences would balance this. In maturity, I’ve learned how self-centered executives can thwart the market forces and treat employees as chattel.
—Dorver Kendig, Webster
I’ve seen inverse correlation between CEO pay and company performance. High CEO pay is legalized corruption. If CEOs want to make lots of money from their performance, they can buy stock or options in the company for which they work. The classic example of this problem is Antonio Perez and Eastman Kodak.
—David Rubin, retired
This information should be for shareholders only. Some companies have top-loaded executives such as Morgan Stanley with little manufacturing or retail jobs and some are some are bottom-loaded like Wal-Mart or Home Depot. The numbers would be quite different and misleading to the general public.
—Daniel Mossien, architect
I detest mandates as an intrusion of “outsiders interfering with the successful running of an enterprise.” Yet, this “crazy” CEO remuneration must be brought in line with those who provide the success of the enterprise!
—J.A. DePaolis, Penfield
The truth often hurts.
—Roy Kiggins, Seneca Falls
A bit of fresh air into the secrets of the corporate boardrooms. Unlikely to actually be widely understood, but it provides a statistical window into the network of “good old boys” and may either foment a political response or at least embarrass a few companies that whine about minimum wage killing their profits.
—Wayne Donner, Rush
This is just another “politically correct” agenda item being foisted on the public. It’s part of an effort to ultimately allow the government to set wages for everyone. Think this is far-fetched? What about the recently enacted $15 per hour wage rate for fast-food workers? What about the proposed new rules for overtime? There is a concerted effort by those on the left to control more and more aspects of our lives. Does anyone think that this will stop with large public companies? How long will it be before it applies to all companies, including privately held organizations, enforced through the tax code and reporting? Incrementally they do these things in the interest of “fairness and equity” and individually their efforts may seem innocuous and well intentioned. But eventually we’ll all wake up and realize that our freedoms have been significantly reduced and that we don’t work for ourselves, but rather for the government.
—Keith B. Robinson, Diamond Packaging
I don’t have any issue with info and transparency but wonder: First: Why just the CEO? Not the top 5 already in annual proxy? 2: How will employee median pay be determined? Base? Overtime? Bonus? Benefits? Full time or part time too? And USA only or China/India/Pakistan workers, as well? This is the devil in detail, not the ratio! 3: Why limit to business? Why not top NFL player on team ratio to all? Or Hollywood movie lead actor to all worked on movie? Or partners in law firm to associates and paralegals? Our college president to all staff? Include adjunct? Seems really about media and anti-business politics, not info about widespread pay disparity in society!
—Dave Giambattista, Fairport
This is just more government meddling. Most people will ignore it.
—Jim Weisbeck, Bloomfield
As a model for public companies and the disclosure of the ratio of CEO compensation to median worker pay, I suggest that all federal and state government agencies do the same. This figure for the top positions should include all salaries, benefit packages, retirement and per diems.
—Clifford Jacobson M.D.
Doesn’t the SEC have better things to do? They have caved in to the left-wing media and their allies, the radical left. It’s pathetic that they were intimidated by followers of Barack Obama and Karl Marx. Karl Marx was the author of the Communist Manifesto. It’s ironic Barack Obama’s economic policies are bankrupting the United States with almost $19 trillion of national debt with unfunded liabilities of over $200 trillion. All this debt has produced is the weakest economic recovery in modern history. Furthermore, Barack Obama’s mentor was Frank Marshall Davis who was a devout advocate for the Soviet Union style communist economic system. Of course, Karl Marx’s economic system, which Barack Obama is a fan of, has been a failure throughout world history.
—John Rynne, president, Rynne, Murphy & Associates Inc.
The new SEC pay-ratio disclosure rule should really be just the first step toward much fuller disclosure of how boards of directors manage their executives, not just on compensation, but on a whole range of subjects relevant to their share owners. Remember, most stockholders aren’t asking for a vote on these issues. It’s only when it gets completely to of hand that draws attention of the regulators.
—Hal Gaffin, Fairport
8/14/15 (c) 2015 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or email email@example.com.