Menendez Reacts to SEC Vote Approving CEO-to-Worker Pay Ratio Rule

Menendez Reacts to SEC Vote Approving CEO-to-Worker Pay Ratio Rule

WASHINGTON, DC – U.S. Senator Bob Menendez (D-NJ), a senior member of the Senate Banking Committee, today issued the following statement after the Securities and Exchange Commission (SEC) voted 3-2 to adopt the CEO-to-Worker Pay Ratio rule, a Menendez-authored mandate in the Dodd-Frank Wall Street Reform Act of 2010 requiring public companies to disclose the ratio of their CEO’s total compensation to their median worker’s compensation.

“Today, after five years of delays, I am pleased to see the SEC take the final step to clear the way for the CEO-to-Worker Pay Ratio to become a reality. While this common-sense proposal never should’ve fallen victim to controversy, today’s rule is an important step towards fairness and transparency. The CEO-to-Worker Pay Ratio will provide a valuable tool for investors who have every right to weigh this important metric in their investment decisions.

“I plan to closely review the rule to ensure that it strikes the right balance between flexibility and accountability, and that provisions intended to facilitate compliance do not open up loopholes.”

“By implementing this CEO-to-Worker Pay Ratio disclosure rule, we’ll fulfill a key enforcement tool of the Wall Street Reform Act aimed at injecting transparency, promoting fairness in Corporate America and restoring sanity to runaway executive pay. Big corporations who insist on top-heavy compensation models will no longer be able to hide from the shareholders.”

“We have middle class Americans who have gone years without seeing a pay raise, while CEO pay is soaring. This simple benchmark will help investors monitor both how a company treats it average workers and whether its executive pay is reasonable. I urge the SEC to make up for lost time by expeditiously implementing this important provision without further delays.”

A 2014 study by the Economic Policy Institute found that chief executive pay, as a multiple of typical worker’s pay, increased exponentially from an average of 20 times in 1965 to 295.9 in 2013. 

Senator Menendez authored the provision requiring disclosure of the ratio, which was included as Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. While there was no deadline by which the rule must be finalized, some companies fought against it, claiming it increases compliance costs and is overly burdensome. Menendez has led the effort in calling on the Commission to issue the rules needed to implement the requirement since the law passed five years ago, including letters in 2011, 2012, 2013, and 2014.