In a 3-2 vote, the Securities and Exchange Commission on Wednesday agreed to release a proposed rule that would require public companies to disclose the ratio of their chief executive's pay to the median pay level of its employees.
At his first open meeting since being confirmed by the Senate, commission member Michael Piwowar blasted the rule, saying the SEC should not have even considered it.
“The commission should not be spending any of its limited resources on any rule making that unambiguously harms investors, negatively affects competition, promotes inefficiencies and restricts capital formation,” he said.
The objective of the pay ratio, Mr. Piwowar said, is “to shame CEOs.”
“But the shame from this rule should not be put upon CEOs; it should be put upon the five of us who will be voting on this proposal today,” Mr. Piwowar said. “Shame on us for putting special interests ahead of investors. Shame on us for letting special interests distract us from our core mission. Shame on us for surrendering our rule-making agenda to those special interests.”
The Dodd-Frank law requires the SEC to amend its existing company disclosure rules to include the executive/employee pay ratio. Supporters of the rule, such as the AFL-CIO, argue that it would illuminate wide compensation disparities in the American workplace.
The SEC voted 3-2 to approve the release of the proposal for comment.
“I hope that in future rule makings the commission will hold itself to higher standards with respect to the process by which we deliberate,” Mr. Piwowar said.