WASHINGTON – Today, Congressional Progressive Caucus (CPC) Co-Chairs Reps. Raúl Grijalva (D-AZ) and Keith Ellison (D-MN) joined Financial Services Committee Ranking Member Maxine Waters (D-CA) in calling on the Securities and Exchange Commission (SEC) to finalize the rule requiring publicly-traded corporations to disclose the ratio of the compensation for their CEO to the compensation of their median worker.
The three lawmakers urged completion of the so-called “Median Worker Pay Ratio Rule” via a letter sent today to SEC Chair Mary Jo White. This rule would implement section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was enacted more than four years ago.
The letter was signed by 47 Representatives including Reps. Beyer, Boyle, Brownley, Capuano, Chu, Cicilline, Clark, Conyers, DeFazio, DeSaulnier, Edwards, Ellison, Eshoo, Frankel, Garamendi, Grayson, Grijalva, Gutiérrez, Honda, Jackson Lee, Johnson, Kaptur, Langevin, Lawrence, Lee, Lynch, Matsui, McDermott, McGovern, Moore, Norton, Pallone, Plaskett, Pocan, Rangel, Schakowsky, Scott, Smith, Takano, Tonko, Tsongas, Van Hollen, Visclosky, Walz, Watson Coleman, Waters, and Welch.
The text of the letter is below and signed copy can be found here.
Dear Chair White:
We remain disappointed by the Securities and Exchange Commission’s (SEC) delay in implementing section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. This section requires publicly-traded companies to disclose the ratio of the compensation of their CEOs to the pay of their median worker. This rule has now been delayed three times, and the Commission continues to solicit more comment on a proposal Congress already told it to complete. In the meantime, Commissioners Luis A. Aguilar and Kara M. Stein have offered their public support for a completed rule. We urge you to do the same, and finalize this Congressionally-mandated rule.
Congress enacted the CEO-to-worker pay ratio disclosure rule in response to public concerns over escalating executive pay and the need for investors and the public to have this information available in an easily understandable format. Finalizing this rule has also never been more needed as income inequality continues to grow. In 2014, a CEO of an S&P 500 company made, on average, $373 for every $1 earned by the typical rank-and-file production worker in the U.S., according to the AFL-CIO’s Executive Paywatch website. While executives make critical decisions about the direction of their companies, investors know that it is the quality employees who ensure those decisions are properly implemented.
The SEC rule must require companies to include all domestic, international, full-time and part-time workers in the calculation of the CEO-to-worker pay ratio. A rule that excludes international and part-time workers would be a clear violation of congressional intent.
In April of last year the Indian Ministry of Corporate Affairs adopted similar pay ratio disclosure regulation for public Indian companies. Indian companies will shortly begin disclosing the ratio in their annual financial statements for the fiscal year that ended March 31, 2015. Investors in American-listed companies should be afforded the same ability to consider whether compensating a CEO hundreds of times what the employees earn is a wise use of their resources.
We strongly oppose waiting until 2016 to finalize this rule, and urge the SEC to complete this rulemaking.