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May 22, 2014

U.S. Chamber Opposition to CEO-Median Employee Pay Disclosure Reveals How Much Big Businesses Have to Hide

Chamber Report Overblows Costs of Compliance, Revealingly Complains Dodd-Frank Disclosure Would Cause ‘Shame’

Note: Today, the U.S. Chamber of Commerce released a report titled, “The Egregious Costs of the SEC’s Pay-Ratio Disclosure Regulation.” The calculation in question is part of a section of the 2010 Dodd-Frank Wall Street Reform Act that requires publicly traded companies to disclose the CEO’s pay as a multiple of the median-paid employee at the firm. The report includes a survey by four trade associations that claim it would take 952 hours to calculate the median of company pay for the average firm. Below are comments from two Public Citizen experts.

Bartlett Naylor, financial policy advocate at Public Citizen’s Congress Watch division:

“The Chamber is simply recycling the same tired tropes about the high cost of compliance it has used to fight this simple rule since Congress approved it in 2010. It is simply not credible that the typical firm would need to spend more than a few hours estimating the median of company pay.

“The U.S. Securities and Exchange Commissions’ proposed rule permits statistical sampling, which allows the company to perform minimal analysis on the vast majority of employees who are paid either in the top or bottom half. The Chamber’s own data reveal that some companies can complete the calculation for $10,000, which is already an exaggeration. A well-managed company should already know how much its employees make.

“The Chamber’s corporate members fear a marketplace where investors can use the mandated contextualized CEO pay figure. After analyzing other factors at the firm, the prudent investor will choose a company with a low CEO-to-median-pay ratio. That’s because such a CEO represents a better value than a firm with a high ratio. Additionally, there’s more room on the upside to increase pay if the CEO performs well.”

Sam Jewler, communications officer at U.S. Chamber Watch, a project of Public Citizen’s Congress Watch division:

“The Chamber’s report claims that the intent behind the pay ratio rule is to ‘shame’ companies, but greater transparency can bring shame only if the company has something to hide. As CEO compensation continues to rise, the income inequality gap widens further. Big companies are secretively backing the Chamber for fear that the public outcry could result in full disclosure of how much more money executives of big companies are making than their hard-working employees.”


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