You know, I don’t expect our politicians to be looking to screw over big businessmen at every opportunity. I really don’t. I’m not a class warrior, and I think a responsible political representative has to listen to all sides and try to come up with equitable policies that will help promote job growth in their communities, protect workers, and provide some fairness and security to our economic system.
The problem, as I see it, is that things have tilted way too far in the direction of business. This happens, and you hope there’s a correction eventually. And, as long as things are this out of whack, I’m going to be siding pretty strongly with workers, including the labor movement, in most of these types of disputes.
I don’t think this new SEC rule is actually that big of a deal, except that it’s a signal that things are moving ever so slightly back in the direction of ordinary people.
The Securities and Exchange Commission narrowly adopted rules Wednesday implementing a contentious provision requiring companies to detail for the public the pay gap between top executives and average employees.
The regulator voted 3-2 to adopt the final rule, which implements a provision of the Dodd-Frank financial reform law. The commission’s two Republican commissioners split with its three Democrats.
Getting the rule finalized, five years after Dodd-Frank’s enactment, is a win for labor unions that had long pushed for the provision’s implementation and a loss for businesses trying to soften its requirements and slow its progress.
The final rule now requires public companies to disclose the pay ratio between the company’s CEO and its average employee.In the split vote, the SEC put into place one of the biggest remaining chunks of Dodd-Frank, which just turned five years old in July, and also one of the most controversial items still on the agenda.
The little-known rule has pitted the nation’s biggest business groups against the largest labor unions, with the SEC sitting squarely in the middle.
I actually do get why this was worth fighting for, and I am very pleased with the result. But, it’s a baby step.
More soon, please.
Clinton called for this in her big NYU economics speech last month–
Mother Jones noticed it for its weird specificity and seeming to call out the Obama administration for not enforcing its own law.
Is that weird?
What seems weird to me is that the SEC gets to vote on whether they have to implement a law that’s already on the books.
over at the Orange place said corporate lobbyists blocked its implementation. didn’t say what precisely that means, but one would think that if something became a law, people who didn’t like that law wouldn’t be able to have do overs to block it
It’s the specific regulation they vote on, after their staff writes it. More at a Times story from April.
this is a good thing
Isn’t this information for investors?
Doubt employees of publicly traded companies don’t have a good idea where they stand in relationship to the top executives.
Newspapers, I think, and newspaper-reading consumers. It’s about public shaming.
Not that the stockholders, Board of Directors, CEOs, etc. shouldn’t be shamed.
Indeed. Best if it would work as an incentive to avoid public shaming.
Greed, assuming criminal acts aren’t involved, has been fully disconnected shame. There’s not much less today that results in public shaming and behaviors that would once have been considered shameful are easily tossed aside with a disingenuous “I’m sorry.”
It is a small step. But that’s how progress is made (or lost). Numerous tiny battles, each of which can be quite challenging. Large scale revolutions rarely end well. Real change requires lots of tiny steps.
This includes compensation in the form of stock, right? Otherwise, it’s pretty meaningless. Mark Zuckerberg only gets a dollar a year in salary and benefits worth no more than a few hundred thousand. The rest is stock. This is a little different than wages, as companies generally don’t buy back their stock to pay options (buying back is a separate decision made for different reasons); they just issue new stock or already had it in reserve (meaning they issued it in advance). So this compensation is not directly a company expense – it is either paid by the other stockholders whose interest is being diluted (if you think the stock market rational) or simply being printed (if you think the stock market a babbling madman).
Of course, one could also compensate common employees with stock, and high-tech firms often do, even mature ones to a degree. So then the fight is for a more equitable distribution of stock, which is a road leading towards at least partial employee ownership.
Here’s the actual rule:
https://www.sec.gov/rules/final/2015/33-9877.pdf
the answer to your question is yes, it includes all compensation
Thanks.
you’re welcome
Agreed. This rule gets rather complicated very fast. How are all forms of compensation treated, like stock compensation, pension values and deferred pay and other benefits. Then there is the question of what happens to foreign investments. Are those workers part of the ratio or is the pay allocated and what of foreign executives. Seems it is a rule that would please some of us but likely very difficult to make meaningful.
I posted the rule above but they’re using the chart in SEC Regulation S-K Item 402(c).
It looks to include all compensation
Thanks. I noticed that pdf file is 294 pages long.
yeah but the important part can be found in the summary and then I just had to track down that other rule
Obama Drafts Order on Paid Sick Leave for Federal Contractors
Interesting in lieu of our recent conversation here with regard to sick and paid leave.
Looks like Obama will go for 7 days annually (anemic, but better than any other government regulation in the country that I know of), and it will be allowed to accrue indefinitely and roll over:
That’s pretty broad. I have to commend him for this.