Rising Angst Among Defenders of Overpaid CEOs
Efforts to repeal CEO-worker pay ratio disclosure continue but the odds of success are growing longer.
Overpaid CEOs enjoyed a sweet victory in June when the House of Representatives took action to protect them from having to disclose how much more money they make than their workers.
But the celebration didn’t last long. The odds of the Senate taking similar action any time soon were always long. Now, given the health care quagmire, these odds are even longer.
And the clock is ticking. Under the regulation requiring this CEO-worker pay ratio disclosure, large publicly held corporations are due to start reporting their numbers in 2018.
What about non-legislative action? The regulation, which arose out of the Dodd-Frank financial reform law, certainly has plenty of enemies outside the halls of Congress.
One of the most ardent is SEC Commissioner Michael Piwowar, who gets downright apoplectic when speaking about the horrendous burden this “useless” and “special interest-motivated” regulation imposes on corporations — corporations that apparently don’t have the foggiest idea how much they pay their own workers (publicly held firms already report the CEO side of the ratio equation).
When asked about the issue at a July 17 Heritage Foundation event broadcast on C-Span, Piwowar said “first best” would be Congressional repeal — in fact, he exclaimed, that would be “fantastic!” But in this interview and in a speech a few weeks earlier to the Society on Corporate Governance, Piwowar suggested that regulatory actions to delay or water down the regulation might also be possible, depending on how the public weighs in on the question of costs and benefits.
He and other defenders of overpaid CEOs have reason for angst. A recent Washington Post article pointed out that even if Piwowar decides to push for an SEC vote to delay the rule, he might have to wait until at least one of the two current vacancies on the Commission is filled. Three Commissioners are needed for a quorum and the current Democratic appointee could scuttle votes by merely not showing up. President Trump did submit an SEC nomination recently, but it needs to be confirmed by the Senate and well, you know, quagmire.
In the meantime, there are growing signs that the pay ratio train has left the station. Even Wall Street Journal columnist Stephen Wilmot has weighed in favorably, suggesting the information might be useful in flagging investment risks such as those that led to the 2008 financial crisis.Perhaps out of desperation, the U.S. Chamber of Commerce is trying out new and different arguments against the regulation, beyond the usual “burdensome” line. In July 18 testimony before a subcommittee of the House Committee on Financial Services, Thomas Quaadman, a Chamber Executive Vice President, railed against a new policy in Portland, Oregon to apply a small surtax on corporations that pay their CEOs more than 100 times their median worker pay. Lawmakers in five states are considering similar bills.