SEC proposes greater disclosure about CEO pay

New York TimesSeptember 21, 2013 

The gap in pay between chief executives and rank-and-file employees has been growing steadily, and now regulators want companies to tell investors just how wide it is.

The Securities and Exchange Commission, addressing an issue that has captured the public’s attention like few others at the agency, proposed a rule last week that would require publicly traded companies to disclose the difference between the pay of chief executives and their employees.

Three of the five members of the SEC voted in favor of the proposal, which would require public companies to report the ratio of top executive compensation to the median compensation of their employees. Median pay is the point at which half the employees earn more and half earn less.

Public scrutiny over outsize pay packages at some of the country’s biggest companies has intensified since the financial crisis, and the SEC said it had received more than 20,000 public letters in support of and opposition to its new proposals.

The response from the SEC’s five commissioners reflects the divisive nature of the topic of executive pay. One commissioner, Daniel M. Gallagher, called the proposal a “rotten mandate” while another, Luis A. Aguilar, emphasized it as a significant step toward “enhanced accountability.”

The proposal is part of the Dodd-Frank financial overhaul legislation, which requires the SEC to amend existing rules on pay disclosure. Publicly listed companies are now required to disclose the compensation of their chief executives but not pay for other employees.

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