Washington, D.C. – U.S. Senator Tammy Baldwin joined a group of U.S. Senators today in sending a letter to Securities and Exchange Commission (SEC) Chair Mary Jo White urging the agency to forge ahead with a final rule requiring public companies to disclose their CEOs’ total compensation compared to rank and file workers as directed by the Dodd-Frank Wall Street Reform Act of 2010.
The letter was led by Senator Robert Menendez (D-NJ) and also signed by Senators Jack Reed (D-RI); Elizabeth Warren (D-MA); Jeff Merkley (D-OR); Dick Durbin (D-IL); Tom Harkin (D-IA); Bernie Sanders (I-VT), Sheldon Whitehouse (D-RI); Richard Blumenthal (D-CT); Barbara Boxer (D-CA); Carl Levin (D-MI); Ed Markey (D-MA); Mazie Hirono (D-HI); and Al Franken (D-MN).
The Senators wrote: “Because it has now been more than a year since the SEC issued its proposal and more than four years since the Wall Street Reform Act became law, we ask for your assurance that the SEC is still planning to finalize the rule in the very near future. 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.”
“While some opponents may prefer not to disclose this information, Congress already enacted and the President already signed the requirement into law more than four years ago. All that remains is for the implementing rules to be finalized, as the statute requires.”
The Senators highlighted the rule’s importance, writing, “When a company’s performance improves but only the CEO is rewarded ... investors should know, so they can ask what kinds of incentives this creates for the company’s future performance. Or when a CEO asks for a raise while giving other employees a pay cut, investors should have this information to help them evaluate whether this is value creation or simply value capture by insiders.”
On September 18, 2013, the SEC voted 3-2 to propose the new rule that would require public companies to disclose the ratio of the compensation of their chief executive officer to the median compensation of their employees. A 60-day public comment period followed, which ended on December 2. During that comment period, several Democratic senators wrote a letter in support of the requirement, noting the shortcomings of existing tools for setting executive compensation that can “too often drive CEO pay upward without clear links to additional value created” and the need for “better information and better metrics” such as the CEO-to-worker pay ratio to restore accountability to investors.
An online version of the letter can be found here.