From: The Honorable Keith Ellison
Sign Letter to SEC Acting Chair: No Delay for CEO-Median Worker Pay Ratio Rule
Please join us in sending the below letter to the Acting Chairman of the Securities and Exchange Commission opposing any delay in the implementation of the requirement that
publicly-traded companies disclose the
ratio of the compensation of their CEOs to the compensation of their median worker.
This CEO-Median Worker Pay Ratio
requirement was included in the Dodd Frank Wall Street Reform and Consumer Protection Act which passed nearly five years ago. The first reporting period just began this year. Yet, Acting Chairman
Piwowar has suggested plans to delay or weaken the rule simply because he says some companies are having a difficult time calculating their median worker pay.
The Dodd Frank Wall Street Reform and Consumer Protection Act included the pay-ratio provision as a guide for investors who must vote on compensation and ensure that financial
incentives for leadership are aligned with corporate success. To join the letter, please contact Adria Crannell or Carol Wayman in Mr. Ellison’s office at
firstname.lastname@example.org or email@example.com or 5.4755 by
March 10, 2017.
/s/ /s/ /s/
Keith Ellison Maxine Waters Raúl M. Grijalva Mark Pocan
Member of Congress Member of Congress Member of Congress Member of Congress
Dear Acting Chair Piowowar:
We write to oppose any delay in the full implementation of the CEO-median worker pay ratio disclosure rule. While this rule was mandated by the 2010 Dodd-Frank Wall Street
Reform and Consumer Protection Act, it was not finalized until 2015. The first reporting period just began this year. It would be a terrible mistake to delay or weaken the rule simply because, as you allege, some companies are having a difficult time calculating
their median worker pay.
Congress enacted the CEO-to-worker pay ratio disclosure rule in response to public concern over high executive compensation and the need to have this information available
in an understandable format. The CEO of an S&P 500 company makes, on average, $331 for every $1 earned by the typical rank-and-file worker. In some companies, this ratio can reach as high as $1,000 to $1.
Investors should be able to consider if a CEO provides hundreds of times the value of their employees prior to investing in a firm. While executives make critical decisions
about the direction of their companies, quality employees ensure those decisions are properly implemented. This pay ratio information will benefit investors by giving them valuable information for ascertaining whether company employees are fairly compensated
and help them decide how to cast their “say-on-pay” advisory votes on executive compensation.
Research shows the higher the CEO to median worker pay ratio, the more likely that CEO is to pursue the kind of risky investments that brought on the global financial crisis.
The Institute for Policy Studies found that nearly 40 percent of the CEOs on the top 25 highest-paid lists over a 20-year period wound up being fired, sought a bailout, or were forced to pay fraud-related fines. Furthermore, a lower ratio of CEO to median
worker pay implies more investment in human capital and a longer-term outlook for the corporation. According to the Center for Audit Quality’s annual investor survey, 46 percent of investors say they consider CEO compensation in their decision making.
The current culture of paying CEOs hundreds of times more than the typical employees hurts working families, is detrimental to employee morale, and goes against what research
shows is best for business. Management expert Peter Drucker argued that a pay ratio not exceeding 20-to-1 or 25-to-1 is ideal, and that higher pay ratios make it difficult to foster the kind of teamwork and trust that businesses need to succeed. Today’s numbers
dwarf that optimal ratio, contributing to stunning widening of economic inequality – 95 percent in income gains since the global financial crisis have gone to the top 1 percent while ordinary workers’ pay has stagnated.
We urge the SEC to allow the full implementation of the CEO-median worker pay ratio rule without delay (Section 953(b)). The rule provides flexibility to firms to enable their
compliance with the law without exemptions that undermines the intent of the law. Thank you for your attention to this matter and your prompt reply.