June 6, 2014
Survey Results: Pay Ratios
We have posted the survey results regarding how companies are preparing now for the SEC’s upcoming pay disparity rulemaking (compare to the same poll from two years ago), repeated below:
1. At our company, the board:
– Does not consider internal pay equity when setting the CEO’s compensation – 64%
– Does consider internal pay equity as a factor by comparing the CEO’s pay to all employees – 8%
– Does consider internal pay equity as a factor by comparing the CEO’s pay to other senior executives – 36%
– Does consider internal pay equity as a factor by comparing the CEO’s pay to a formula different than the two noted above – 3%
2. Ahead of the SEC’s mandated pay disparity disclosure rulemaking under Dodd-Frank, our company:
– Has not yet considered how we would comply with the rules – 74%
– Has begun considering the impact by assessing whether we could comply with the precise prescriptions in Dodd-Frank but we have not yet tested statistical sampling – 29%
– Has begun considering the impact by assessing whether we could comply with the precise prescriptions in Dodd-Frank including assessing whether we could use statistical sampling – 12%
3. As one of the companies that have assessed the impact of the SEC’s mandated pay disparity disclosure rulemaking, our company:
– Believes we could comply with the precise prescriptions in Dodd-Frank without too great a burden – 78%
– Believes we could comply with the precise prescriptions in Dodd-Frank but it would be too burdensome unless statistical sampling is allowed – 3%
– Believes we could comply with the precise prescriptions in Dodd-Frank but it would be burdensome even if statistical sampling is allowed – 25%
– Believes we wouldn’t be able to ever comply with the precise prescriptions in Dodd-Frank – 0%
4. In your own opinion, do you think that statistical sampling would have too high a potential for manipulation or material error:
– Yes – 84%
– No – 5%
– I don’t have an opinion – 19%
Please take a moment to participate in this “Quick Survey on CEO Succession Planning” – and this “Quick Survey on Distributing Proxy Materials Via E-mail to 401(k) Plan Participants.”
Pay Ratio: California Tax Code Bill Dies
Over on CompensationStandards.com, I have blogged about a California bill – California Senate Bill 1372 – that would tie the state’s tax code to a pay ratio formula as a way to tackle income inequality. Last week, the bill was narrowly voted down in the California Senate, 19-17. See this LA times article; AP article – and Towers Watson note.
SEC’s Reg Flex Agenda: Four Horsemen Rulemakings Comings & Goings
A few months ago, I blogged about some remarks from Corp Fin Director Keith Higgins that included a status update on the Four Horsemen rulemakings from Dodd-Frank. Last Friday, the SEC issued its semi-annual Reg Flex Agenda indicating that the pay ratio rules would be adopted by October – and that the three other rulemakings would be proposed by that same month. Does this really mean anything? No, not really – as Reg Flex Agendas tend to be “aspirational” as I’ve blogged about a few times recently.
That doesn’t mean that I don’t believe those actions will be accomplished by that date. In fact, SEC Chair White has continued to express a desire to get all the Dodd-Frank rulemakings behind her – so I would be surprised if we didn’t see final pay ratio rules sooner, as well as proposals on at least some of the other three before then too. But you never know, particularly as the five Commissioners seem to be more polarized than ever…
A potential wild card here is that the House Financial Services Committee recently passed 9 capital formation bills – some with strong bipartisan support and some that would require the SEC to adopt new rules within a short timeframe (eg. 180 days). A new spate of required rulemakings could hinder any plans to act on some or all of the Four Horsemen…
– Broc Romanek