SEC to Require CEO Pay Disclosure

[ClydeR]

The Securities and Exchange Commission voted 3-2 Wednesday to propose a rule that would require companies to disclose how their chief executives' compensation compares with that of all company employees.

Under the SEC plan, released for public comment in a 3-2 vote, companies would need to disclose the median of the annual total compensation for their employees and the ratio of that median to the annual pay of the CEO.

The SEC's five commissioners were divided on whether to propose the plan, with Republican Commissioners Michael Piwowar and Daniel Gallagher criticizing the measure as a special interest provision that would not help investors.

More... (http://www.chicagotribune.com/business/breaking/chi-ceo-pay-20130918,0,6063818.story)

The Republicans are right. Knowing how much the CEO makes would not help investors one whit.

[DoctorUnne]

Investors already know how much the CEO makes. It's called a proxy statement. What they don't know in many cases is how much the median employee makes.

[Thondalar]

Why does it matter how much anyone makes?

"Be your own, get your own...be independent, nigga" ---- Snoop Dogg

[Tgo01]

Why does it matter how much anyone makes?

Apparently some people think the CEO of a company should only make two to three times as much as the lowest paid employee at a company.

It's kind of funny really.

[Tenlaar]

Apparently some people think the CEO of a company should only make two to three times as much as the lowest paid employee at a company.

It's kind of funny really.

I don't think anybody thinks the CEO should be making two to three times as much as a janitor. I do think a lot of people have a problem with the current state of things, with CEOs commonly making 200 to 500 times the average salary of their employees. Not the lowest paid employee, mind you, but the average salary.

[ClydeR]

Republicans in the House have introduced a short bill, the "Burdensome Data Collection Relief Act," to repeal that section of the law.

http://www.govtrack.us/congress/bills/113/hr1135#summary/libraryofcongress

[Tgo01]

I don't think anybody thinks the CEO should be making two to three times as much as a janitor.

I think you'd be surprised...

[Gelston]

Custodial Engineer*

[Bobmuhthol]

It's kind of a weird disclosure, since everyone knows how much every CEO makes. The only new information is the median salary of employees, which basically becomes a regulated and simplified version of Glassdoor.

[Kembal]

yeah, I'm not sure it tells you much more about whether the CEO is looting the company or not. $100 million salary? Looting the company. Knowing that the median employee makes $60,000 probably doesn't change that.

[Thondalar]

I don't think anybody thinks the CEO should be making two to three times as much as a janitor. I do think a lot of people have a problem with the current state of things, with CEOs commonly making 200 to 500 times the average salary of their employees. Not the lowest paid employee, mind you, but the average salary.

This doesn't bother me a bit. In my opinion the CEO should make as much money as the company can stand to pay him and still turn a profit. If you want to make that much money, become a CEO. Quit worrying about what other people are doing and worry about what YOU are doing.

[Bobmuhthol]

In my opinion the CEO should make as much money as the company can stand to pay him and still turn a profit.Your opinion is fucking retarded and goes against the concept of a public company.

[Latrinsorm]

Honesty is the best policy. If they don't want to answer, what are they trying to hide? Reminds me of the NFL owners who absolutely insisted they locked out the players because they were losing money, then absolutely refused to open their books to the press.

[Bobmuhthol]

Honesty is the best policy. If they don't want to answer, what are they trying to hide? Reminds me of the NFL owners who absolutely insisted they locked out the players because they were losing money, then absolutely refused to open their books to the press.

Tim Bartl, the president of the Center on Executive Compensation, said that over the past three years, shareholder support for proposals to require companies to disclose a CEO to worker pay ratio has been extremely low.

Of the 14 proposals, Bartl said the average vote against them was 93.5 percent.

“When you boil it down, the pay ratio disclosures is not information that investors broadly speaking find useful,” he said. “There is no business purpose for the companies to collect data in that way.”.

[Thondalar]

Your opinion is fucking retarded and goes against the concept of a public company.[/COLOR]

You're a poopie-head stupid face.

[Whirlin]

Arguing the necessity and value derived from the additional reporting is valid.
Saying that it's too difficult to compile the data is a shitty argument.

And the republican bill that Clyder linked removes the requirement for annual total CEO compensation reporting, which appears to be an attempt to decrease reporting beyond what it was before.

What bothers me though is that the SEC made this determination and changed their regulations because that's the entire purpose of the organization. If they've deemed that to be the best course of action, why would the government step in after the fact when stuff comes up that they apparently don't like? If they think they're able to make better regulations than the SEC, why have the entire commission in the first place?

[DoctorUnne]

Honesty is the best policy. If they don't want to answer, what are they trying to hide? Reminds me of the NFL owners who absolutely insisted they locked out the players because they were losing money, then absolutely refused to open their books to the press.

They never claimed to be losing money to my knowledge (if they did it was a lie and probably misinterpreted). Some clubs were and still are losing money, even after revenue sharing, but the league in aggregate was profitable, although not as wildly profitable as some believed (that has since probably changed with new TV deals). The issue was more players were paid as a strict % (roughly 60%) of gross revenue, which led to clubs making decisions that weren't necessarily within the best interest of everyone, including the players. As an example, club A currently outsources its concession operations to a third party and makes a $10M license fee. Club A determines if it were to do it in house they would bring in $100M of gross revenue and $40M of net revenue (after certain operating costs). Under the first deal the players would make $6M and the club keeps $4M and under the second deal the players make $60M and the club makes $0. Therefore, they don't bring it in house, even though if the players were getting paid as a % of gross revenue they would still get paid more (60% of $40M or $24M) than they're currently making ($6M).

The NFL ultimately signed a deal where the players shared in a larger portion of TV revenue (100% margin) than they did in stadium revenue (lower margin). In aggregate they wound up getting a lower % of the pie, but most of that I'm sure was the general stupidity of the NFLPA and the lack of negotiating leverage they had (owners were fully prepared to lock out for two years).

The NFLPA took the Packers results, which is the only public team, and extrapolated them to assume the whole league was incredibly profitable. The NFL disproved this by showing their numbers to the NFLPA and it showed less than a 10% margin. The issue though is a lot of franchises aren't run to maximize profitability in the same ways their owners' businesses are run - they're treated as a novelty toy. As a result teams were generally much less profitable than they should have been.

[ClydeR]

As required by Dodd-Frank, the SEC has issued the rule requiring CEO pay disclosure.


After a long delay and plenty of resistance from corporations, the Securities and Exchange Commission approved in a 3-to-2 vote on Wednesday a rule that would require most public companies to regularly reveal the ratio of the chief executive’s pay to that of employees.

Representatives of corporations were quick to assail the new rule, which will start to take effect in 2017, saying that it was misleading, costly to put into practice and intended to shame companies into paying executives less.

More... (http://www.nytimes.com/2015/08/06/business/dealbook/sec-approves-rule-on-ceo-pay-ratio.html)

The CEO pay disclosure requirement is a small part of Dodd-Frank. At least three Republican Presidential candidates -- Jeb Bush, Scott Walker and Marco Rubio -- have vowed to repeal Dodd-Frank.

[~Rocktar~]

Your opinion is fucking retarded and goes against the concept of a public company.[/COLOR]

No it doesn't. If the stock holders, you know, the actual OWNERS PAYING THE SALARY are fine with it, then who cares, it's their money. If they aren't, they should replace the board/CEO and have the money spent they way they want. After all, they do own the company.

[crb]

Honesty is the best policy. If they don't want to answer, what are they trying to hide? Reminds me of the NFL owners who absolutely insisted they locked out the players because they were losing money, then absolutely refused to open their books to the press.

Honesty is the best policy... government forcing people to give up information != honesty. This is purely a political move, the left wants data to use in speeches.

CEOs don't own companies, they deserve to get paid what they are able to negotiate from the owners of a company, which are shareholders, as represented by the board of directors. Sometimes a CEO is also on the board, this is often the case where it is the founder of a company, sometimes not. Sometimes they have a cozy relationship, but ultimately the shareholders are in charge and if the company is spending too much on a CEO, so that it hurts productivity, they'll sell their shares and go to greener pastures.

So essentially, you have two free parties undergoing a voluntary consensual negotiation about compensation, the government has no role there. (this also applies to all other workers, by the way).

There is no reason as a society for us to balk at rewarding someone compensation they freely negotiated for. Some actors have to wait tables to pay bills, others own islands. Minor league baseball players often need to be hosted by foster families, Justin Verlander gets a couple hundred million and gets to fuck Kate Hudson. Why would we value businessmen less?

Sure, every once in awhile there are duds, Jim Carrey can get paid $20 million for a flop, a quarterback can get a guaranteed contract, throw three passes, and then get injured for the rest of the season, and some CEOs with nice compensation packages end up presiding over a dying business. Maybe it is all unfair, but so long as all parties entered into the agreement willingly, isn't that their right?

Some thought the solution is performance based pay. It exists for movie stars, athletes, and CEOs. It creates uncertainty, especially for athletes who can get injured, so some avoid it. Other movie stars prefer it, especially if they believe in their project. George Lucas famous forwent pay in exchange for retaining the rights to Star Wars, smart move, some actors will take a lower salary in exchange for more points on the back end. CEOs can get pay in restricted stock options - and people clamored for this in 2008 as the market tanked. So many companies switched to more stock heavy compensation, and guess what? Actual CEO pay increased because the market rebounded. The socialists out there certainly weren't happy about that.

If you want to complain about pay though, lets complain about pay of tax exempt organizations. I don't give a fuck how much Jamie Dymond of Jp Morgan is paid, JP Morgan pays taxes (and bullshit 10 billion dollar shakedown fines), Jamie Dymond's salary is not buoyed in any way by tax payers, under TARP it was decided TARP recipient executives had pay caps of $500k. That was fair I think, except for the fact that many banks were coerced into accepting TARP funds and then denied the ability to pay them back when they asked to. But so long as they were on the taxpayer tit, a compensation limit seemed appropriate.

Many nonprofits however aren't fully charitable, they exist to some extent to provide gainful employment to their employees, and especially officers. Some nonprofit officers can make obscene amounts of money. Sure, they pay income tax on it, but the organization itself would likely not be able to afford to pay as much if they were taxed. As such these large pay packages are indirectly subsidized by tax payers. If, under TARP, it was just for banking CEOs to be capped at $500k, I see it only being fair that charity CEOs get the same treatment.

Any company without a favored tax status? Free to pay whomever whatever they want.

[Kembal]

Shareholders, for practical purposes, are not able to negotiate pay with CEOs. Boards are generally stacked with the CEO's picks, and independent directors are not actually independent. "Say on pay" votes are meaningless because the major mutual fund companies will never vote against the compensation package. I figured this out after I bought some shares in Alcoa (AA). The stock was doing well until it tanked in March. After reading the proxy, I concluded that it wasn't right for the CEO and other top executives to get as big of a salary increase as proposed and voted against their compensation packages. The results later showed a 94% vote in favor of the package, even though the stock had tanked 33%.

I'm not convinced this pay ratio proposal will do anything to shift the needle. But let's see.

[Latrinsorm]

Honesty is the best policy... government forcing people to give up information != honesty. This is purely a political move, the left wants data to use in speeches.

CEOs don't own companies, they deserve to get paid what they are able to negotiate from the owners of a company, which are shareholders, as represented by the board of directors. Sometimes a CEO is also on the board, this is often the case where it is the founder of a company, sometimes not. Sometimes they have a cozy relationship, but ultimately the shareholders are in charge and if the company is spending too much on a CEO, so that it hurts productivity, they'll sell their shares and go to greener pastures.

So essentially, you have two free parties undergoing a voluntary consensual negotiation about compensation, the government has no role there. (this also applies to all other workers, by the way).I did not say the government should dictate a CEO's wages. That would be wrong. Demanding that a CEO disclose their salary is very different. The rest of your post was not even tangentially related to what I said, so I'll leave it at that.

[~Rocktar~]

I did not say the government should dictate a CEO's wages. That would be wrong. Demanding that a CEO disclose their salary is very different. The rest of your post was not even tangentially related to what I said, so I'll leave it at that.

So, you are ok with disclosing your pay to the whole world?

[Latrinsorm]

Sure, why wouldn't I be? It's $30k, alert the media.

[Bobmuhthol]

So, you are ok with disclosing your pay to the whole world?You bet. It's 200k.