AFL-CIO President Richard Trumka released the following statement after the U.S. Securities and Exchange Commission (SEC) finalized the implementation of a rule requiring companies to reveal the pay of their CEOs:
We are pleased that the SEC took action and recognized the difficult task the commission undertook as it came under numerous attacks by corporate interests. The rule will provide important information about companies’ compensation strategies and allow shareholders to determine whether CEO pay is out of balance in comparison to what a company pays its workers. We believe investors deserve transparency.
We hope this rule will help investors make sound decisions when they vote on executive compensation packages. However, we are concerned that it contains weaknesses that could be exploited to allow companies to avoid reporting the median income of all workers. The Dodd-Frank Act was meant to protect investors and ensure that our economy works for all. We hope the SEC moves quickly to finalize the outstanding regulations mandated by Congress under Dodd-Frank.
Earlier, Trumka wrote an op-ed for CNN that discusses the importance of increasing transparency in what companies pay their CEOs. He says that something is "terribly wrong" in the way our system currently works and that, at a minimum, the first step toward improving the situation is to reduce the secrecy around what these big corporations are doing. He goes on:
So when the landmark Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 was passed to rein in Wall Street greed, it included a provision mandating that the Securities and Exchange Commission require corporations to disclose their CEO-to-worker pay ratio.
Seems straightforward enough, right?
Unfortunately, Wall Street is much better at doling out lavish compensation packages than disclosing them. The business community is claiming it would cost more than $185,000 and almost 1,000 hours of staff time per company to calculate the CEO-to-worker pay figure.
This is nonsense, plain and simple. Employers should already have this information on the books. Dodd-Frank asks companies to do some simple calculations, not put a man on Mars.