Broc Romanek is Editor of CorporateAffairs.tv, TheCorporateCounsel.net, CompensationStandards.com & DealLawyers.com. He also serves as Editor for these print newsletters: Deal Lawyers; Compensation Standards & the Corporate Governance Advisor. He is Commissioner of TheCorporateCounsel.net's "Blue Justice League" & curator of its "Deal Cube Museum."
As first came to my attention in this Gibson Dunn blog, Corp Fin has issued this no-action response to HP, allowing the company to exclude a Chevedden proposal that sought to prevent the company from holding virtual-only annual meetings. Corp Fin based its decision on Rule 14a-8(i)(7), the first time that the Staff has ruled that this type of proposal is “ordinary business.” Just a few weeks earlier, Corp Fin issued this no-action response to Hewlett Packard Enterprises – not to be confused with HP (they are separate companies) – that allowed the exclusion of a similar proposal on procedural grounds. Don’t forget the transcript from our recent webcast: “Virtual-Only Annual Meetings: Nuts & Bolts”…
By the way, EQS Group became the 1st company in the UK to hold a virtual-only meeting during this past year…
“Consequential” Majority Voting: CII’s New FAQs
Last week, CII published a group of FAQs to majority voting. CII believes that companies should adopt meaningful majority vote standards that are clear and that require failed nominees. CII also doesn’t want companies to dress up a plurality-plus standard – as described in a proxy statement – to look like a majority vote standard. Here’s an excerpt from this blog by Davis Polk’s Ning Chiu:
The Council of Institutional Investors has published an FAQ on majority voting for directors in which it advocates for “consequential majority voting,” a form of majority voting in director elections that essentially removes board discretion if a director receives less than majority support.
90% of S&P 500 companies have a traditional form of majority voting, compared to only 29% of Russell 3000 companies. Most mid-cap and small-cap companies elect directors under a plurality vote system, where the nominees who receive the most “for” votes are elected until all board seats are filled. In an uncontested election, given that the number of nominees is equal to the number of board seats available, a nominee can be elected with one vote.
Tomorrow’s Webcast: “The Latest Developments – Your Upcoming Proxy Disclosures”
Tune in tomorrow for the CompensationStandards.com webcast – “The Latest Developments: Your Upcoming Proxy Disclosures” – to hear Mark Borges of Compensia, Alan Dye of Hogan Lovells and Section16.net, Dave Lynn of CompensationStandards.com and Morrison & Foerster and Ron Mueller of Gibson Dunn discuss all the latest guidance about how to overhaul your upcoming disclosures in response to pay ratio and say-on-pay – including the latest SEC positions, as well as how to handle the most difficult ongoing issues that many of us face.
Starting the new year with a bang! Tune in tomorrow for the webcast – “Non-GAAP Disclosures: Analyzing the Comment Letters” – to hear Meredith Cross of WilmerHale; Steven Jacobs of E&Y; and Dave Lynn of TheCorporateCounsel.net and Morrison & Foerster provide practical guidance about what to do now with your non-GAAP disclosures given Corp Fin’s new batch of comment letters.
SASB’s Inaugural “State of Disclosure Report”
Hat tip to the SASB for their 1st annual “State of Disclosure Report,” which benchmarks sustainability disclosures in SEC filings, including:
– 81% of topics in SASB standards include some form of disclosure in the 10-Ks or 20-Fs; which indicates that companies acknowledge the majority of the sustainability factors identified in SASB standards have —or are reasonably expected to have—material impacts on their business.
– More than 53% of disclosures on these topics use boilerplate language & less than 24% of these disclosures contain metrics – demonstrating that many companies take a minimally compliant approach to sustainability disclosure.
– For the 1st time, SASB has ranked the state of disclosure at the industry level. The top 5 industries, in terms of the overall effectiveness of sustainability disclosure: Education, Car Rental & Leasing, Cruise Lines, Gas Utilities and Tobacco.
The report includes specific examples of actual 10-K/20-F disclosures highlighting the variability in the quality of disclosure within an industry…
Even More on “The SEC Comment Process: What is a ‘Bedbug Letter’?”
Quite a few years ago, I blogged for a second time about what is a ‘bedbug letter.’ It’s a topic that I still receive emails about. As noted in that last blog, it probably derives from an old term for a standard “brush-off” response, which is basically what an SEC Staff bedbug letter is meant to be:
As the story goes, a traveler checked into an exclusive hotel. However, all night long, he could not sleep, because of being bitten by bedbugs. When he arrived home, he wrote a letter to complain. Soon, a letter came back, which said: “Dear Mr. Jones, we are in receipt of your letter which complains that you were bitten by bed bugs while a guest at our hotel. I must inform you that you are mistaken. There are no bedbugs in our hotel. It is completely impossible that you were bitten by a bed bug while a guest at our hotel.” Attached to this letter was a handwritten note, which said: “Send this fellow the bed bug letter.”
Another theory of the origin is that it came from one of the railroads – which commonly had bedbug problems with Pullman berths – that had one or another form of insincere denial or apology. Since this involves the telling of tales, it’s a good time to plug the new “Broc Tales Blog“…
Right before Christmas, the PCAOB issued this sparse statement about Jay Hanson’s abrupt resignation:
PCAOB Board Member Jay D. Hanson notified the PCAOB today of his resignation from the Board. In his letter to the Board, Board Member Hanson wrote: “This is to notify you that I have submitted my resignation as Board Member of the Public Company Accounting Oversight Board to the Commissioners of the U.S. Securities and Exchange Commission.”
The “Going Concern Blog” notes: “I can’t imagine a new appointee to be named any time soon; soon-to-be-former SEC chair Mary Jo White hasn’t reappointed Jim Doty as chair or a named his successor & his term ended in October 2015.” Remember that Jay dissented a few months ago when the PCAOB approved its latest budget…
Mary Jo’s Last “Speech”? We Need Good Global Accounting Standards
In what might be SEC Chair White’s last speech (technically, a “statement” as it wasn’t delivered anywhere) in that capacity, she urged the FASB & IASB to continue to work together & strive for high-quality globally-accepted accounting standards…
– Audit deficiencies are still quite high. The PCAOB considered 39.2% of the inspected audits for annually inspected firms to be deficient in the 2015 cycle. The PCAOB also cited an overall high number of deficiencies for triennially inspected firms.
– The number of deficiencies for annually inspected firms decreased slightly for the first time since we began our survey, from 42.9% in 2014 to 39.2% in 2015. The PCAOB also observed this trend in its 2015 inspection cycle and attributes improved audit quality to the use of practice-aids, checklists, coaching, support teams and efforts to monitor the quality of audit work.
– Audit deficiencies attributable to FVM and impairment engagements continue to be significant and made up approximately one-fourth of all deficiencies. Failures to assess audit risks, test internal controls and to test assumptions underlying prospective financial information are the root causes of most audit deficiencies.
– FVM audit deficiencies are increasingly attributable to business combination engagements, particularly for triennially inspected firms. of the top 25 firms, the incidence FVM deficiencies related to business combinations jumped from an average of 23.1% for 2009 through 2013 to 55.6% in 2014.
– In addition to M&A activity, other economic factors cited by the PCAOB as financial reporting risks are investments in high-yield, hard-to-value securities and impairment risk due to recent fluctuations in oil and gas prices.
– The PCAOB recently reorganized its inspection process and has designated two programs, one for global network firms and one for non-affiliate firms. The global network firms include the six largest annually inspected U.S. firms and approximately 145 of their affiliated firms, primarily located outside the U.S. The non-affiliate firms include four large, annually inspected U.S. firms and an additional 445 domestic and non-U.S. triennially inspected firms.
Wow! That was fast. I had a bunch of blogs ready to run leading up to President Trump selecting a SEC Chair. Just yesterday, I blogged about Carl Icahn providing input. And now Sullivan & Cromwell’s Jay Clayton has been tapped. Jay won’t likely need to clear much of a hurdle during his Senate confirmation hearings – but given Trump’s posturing during his campaign, he will need to sit through questions about his ties to Goldman Sachs – including his wife’s job there (as noted in this Reuters article).
Some of other candidates also were from big law firms – this article notes that Trump met with Gibson Dunn’s Debra Wong Yang. But Debra doesn’t do deals. Jay’s bio indicates he does more than deals, but he’s primarily a deal guy. You have to go a ways back to find the last SEC Chair who was a deal lawyer – Chris Cox (who was a deal lawyer before he became a Congressman).
And it’s been a long time – a real long time – since the last SEC Chair was plucked directly from a law firm. Of course, that background is quite common for a Division Director. Richard Breeden had been a law firm lawyer, but he had two gigs between firm life & becoming Chair. The closest comparison is Ray Garrett, Jr., who left a Chicago firm to become SEC Chair. Garrett had been head of Corp Fin a few years before he left his firm to lead the Commission in the early ’70s.
It’s also been a long time since someone was appointed who wasn’t previously publicly visible (this MarketWatch article notes that the wire services don’t even have Jay’s pic on file). Let me review the Chairs over my career: Shad, Breeden, Levitt, Pitt, Donaldson, Cox, Schapiro and White – all had been in the public eye before ascending to SEC Chair. Ruder is the exception here. But I’m not suggesting that visibility is some sort of SEC Chair qualification. It isn’t.
Some folks asked me yesterday what was “normal” for a SEC Chair. There really isn’t a standard for the job – the backgrounds of former SEC Chairs are all over the lot. A few have worked at the SEC before. Chair Levitt wasn’t a lawyer. Chair White was a prosecutor. Chair Ruder was an academic. Chair Cox was a Congressman. And it’s not the sort of appointment where you read tea leaves from past writings. Obviously, someone’s background plays a role – but the biggest indicator of what a Chair will do is looking at the general direction the President points to…
The Sad Saga of Disbarred SEC Chair Brad Cook
Here’s something that I admit to not knowing before. When Ray Garrett, Jr. became the SEC Chair in 1973, he replaced Brad Cook – who resigned when he got caught up in a securities fraud scandal & was temporarily disbarred in two states for lying to a grand jury in the case. Before becoming the SEC Chair, Cook was the SEC’s General Counsel and first Market Reg Director (serving as both at the same time). He was the youngest person ever to lead a federal agency. He was 35!!!
Corp Fin: Mark Shuman Retires!
It’s notable that Mark Shuman retired at the end of 2016 because he was one of the most dedicated Staffers to ever work in Corp Fin! Serving as Branch Chief in the Office of Information Technologies & Services, Mark mentored more young staffers than you can imagine. He firmly believed in the SEC’s mission – and he will be sorely missed…
Carl Icahn is helping to pick the next SEC Chair! Here’s the intro from this WSJ article by Andrew Ackerman:
A common assumption about Donald Trump is that he’ll run one of the most pro-business administrations in recent memory. But what if, instead, he hews to more of a pro-investor agenda that clashes with big business? That is certainly an increasingly likely outcome after Wednesday’s announcement that the president-elect has tapped billionaire investor Carl Icahn for an unpaid advisory role on overhauling financial regulations. Mr. Icahn, who has already played a part in selecting Mr. Trump’s head of the Environmental Protection Agency, is also vetting candidates to lead the Securities and Exchange Commission, The Wall Street Journal reported.
The appointment suggests the president-elect will select policy makers more in the mold of Mr. Icahn, who has spent the past four decades battling big companies as an activist investor, than those favored by the pro-business wing of the Republican Party. While it’s true that Mr. Icahn generally supports rolling back regulations that he believes crimp the U.S. economy, he is also an outspoken advocate of corporate-governance changes loathed by the business community.
Last week, the SEC announced an enforcement action that is based on two big NYC firms being hacked by some Chinese traders who used the stolen information for insider trading. The SEC’s complaint doesn’t identify the firms – maybe because there’s a parallel criminal proceeding & the law firms are victims of a crime – but this American Lawyer article and WSJ article seem to identify them…
“Occupy the SEC”: Going After Insider Trading
It’s been a while since I blogged about the “Occupy the SEC” group. As noted on its Facebook page, the latest is that the group has filed an amicus curie brief in the push to have the US Supreme Court review the Salman case (this memo summarizes the recent oral arguments in that case)…
Last week, the Department of Labor issued 19 pages of interpretive guidance on proxy voting & shareholder engagement, including the use of shareholder proposals. This guidance updates the DOL’s 2008 guidance in this area. While the new guidance is focused on ERISA funds, it provides affirmation to those investors engaged with companies on ESG issues. Some critics – like the Chamber of Commerce – have argued that some investors are violating their fiduciary duties when then spend time on climate change and diversity…
A Visionary Clawback Policy! (Bonus Edition)
I’m calling this a “bonus” edition blog because if you came to our executive pay conference a few months ago, you’ve heard a good deal of analysis about this visionary clawback policy from SunTrust Banks (I’ve all posted a version in Word in our “Clawbacks” Practice Area on CompensationStandards.com). Our expert panel on clawbacks – and what you should be doing now – covered that policy, the new Well Fargo one and others in detail. Come to our proxy disclosure conference in Washington DC this year!
Anyway, one of our panelists says that reading the SunTrust policy is just like reading “Gone With the Wind” – when you read it, you will laugh, you will cry. You will experience the whole range of human emotions. It’s a well-designed clawback policy, as it covers all incentives (time & performance-based) for all incentive eligible employees. It also allows a clawback for a wide range of issues – such as misconduct, theft, termination for cause, failure to perform duties and restatements to name a few. The clawback appears partly based on the banking regulators’ 2010 guidance that has a number of good principles-based recommendations that are relevant to users of incentive compensation in all industries. The company also has an internal “Events Tracking Group” that monitors incentive payouts – and the Group reports to the compensation committee regularly. SunTrust is one of the few companies that files their clawback policy as an exhibit to their SEC filings.
If you see a clawback policy that you like, let me know & I’ll add it to our samples posted in our “Clawbacks” Practice Area. Also check out these memos on the recent SEC v. Jensen case in the 9th Circuit about clawbacks under Section 304 of Sarbanes-Oxley…and this Covington blog for a high level thought piece on clawbacks…
Our January Eminders is Posted!
We have posted the January issue of our complimentary monthly email newsletter. Sign up today to receive it by simply inputting your email address!
Way back before the SEC started putting out concept releases related to its disclosure effectiveness project, I blogged a few times about disclosure reform (& I was recently interviewed about the topic in this MergerMarket report). I like some of the ideas that SEC Commissioner Kara Stein laid out in this speech earlier this year.
I now tackle how companies should make the disclosure available. Obviously, companies can make disclosure available through SEC filings – a topic that is covered in the next item below. But companies make disclosure available outside of their SEC reporting stream:
This is a tougher topic than it might seem – even though we really are working off a clean slate. There is minimal regulation of IR web pages, social media channels, etc. Other than a few requirements (eg. breaking out Section 16 reports on a SEC filing stream), companies have great liberty on how they make information available.
Should this change? I do believe companies should continue to have great liberty. But I also believe there needs to be a bare minimum as the quality of what companies are doing varies greatly. And many companies are near the bottom of the barrel.
One argument that I have heard is that “investors rarely bother looking at my IR web page, so why should I care?” I have two answers for that – one reason they might not be looking is because you don’t care and there’s nothing there. The bigger answer is that if disclosure reform is successful and companies do start disclosing more meaningful information, then investors will care more about how you make it available.
So what do I mean about bare minimum? I’m thinking out loud here – but I do think the minimum needs to apply to more than just the IR web pages. I think that once a social media channel becomes mainstream, then companies should be under an obligation to deliver information via that channel. This is akin to the listing standards for the stock exchanges requiring a press release. It all boils down to how investors expect information to be delivered. Let me know what you think.
Disclosure Reform: How Should Companies “File” Disclosure?
In what ways should companies “file” their disclosure so that investors can rest assured that it really is the company that made the disclosure? And perhaps this is also necessary for liability purposes?
I do think Edgar is necessary. There needs to be a well-known repository of information that investors can feel comfortable as being trustworthy. Edgar certainly is branded by now and it wouldn’t make sense to change its name or purpose. However, it does make sense to reconsider how disclosure filings are displayed. The suggestions that have been bandied about for some time make sense to seriously consider – e.g., requiring companies to file a “core” disclosure or “company profile” document with information that changes infrequently, supplemented by periodic and current disclosure filings with information that changes from period to period. In addition, there would be transactional filings that have information relating to specific offerings or shareholder solicitations.
And then there is my pet peeve about form labels and how confusing they must be for retail investors. How does a small investor know that – when they search Edgar – a proxy statement is called a “DEF 14A”? The nomenclature on Edgar should change sooner rather than later…
More on “Disclosure Reform: What Do Investors Want?”
Joe Hall of Davis Polk responded to my blog about what investors want by noting:
I think the most important point is the one you get to in the second post. The series of questions I would ask is, who is the investor we are writing for? What are the needs of that particular investor? What does that investor need to be informed about and what do we not need to bother with?
Lawyers who write disclosure, much less company officers who write disclosure, never really focus on this question and it’s because to the extent the SEC has addressed it, they have come up with things like the plain English rules that suggest we are communicating to readers with a ninth grade education and no discernible quantitative skills. And of course court decisions focus on the “reasonable investor” who does not exist.
We don’t really know who to write for because the SEC has never done any studies to find out who reads company disclosures. But ask yourself how likely it is that retail investors get any information at all from 34 Act or 33 Act filings. I would be it is between zero and something less than 1%. Probably why the SEC studiously avoids the question. And I completely agree with your critique of EDGAR. It’s a joke to think that a novice could find anything on it.
What if companies were told to assume their investor was a college educated securities industry professional with several years experience reviewing company disclosures? There are some simple implications to this – e.g. you would lose half of your risk factors and forward looking statement boilerplate and the ones that remain would be the ones that are actually relevant (no more “We are exposed to competition” . . . “If we lose access to capital this could have an adverse effect on our result of operations and financial condition”…”We depend on our chief executive officer”…). But this sort of instruction would also force CFOs and IR folk to think about what analysts really want to know – and they know what this is! They talk to them at least quarterly!
Analysts – and anyone who invests – want to know about the future, not the past. No one really cares how a pre-IPO company priced its options (except to the extent it reveals how willing to play fast and loose management is), and few care about things like dilution, endless product descriptions, “compensation philosophy” etc. They are often interested in company specific things that aren’t covered in S-K line item requirements. What’s your utilization ratio? How much are you going to have to spend to complete that new mine? How will that new product work on a mobile platform? The staff would still be able to review and comment on a filing – all they would have to do is listen to the company’s earnings call and see whether the company’s disclosures are addressing the questions on analyst’s minds.
Back in September, the US Supreme Court denied cert in the Tilton case based on a constitutionality argument of the SEC’s administrative law judge framework. Now there is another split in the circuit courts over the ALJ’s constitutionality that might be heading SCOTUS’s way in the wake of the new decision, Bandimere v. SEC (we’re posting memos about this new case in our “SEC Enforcement” Practice Area). Here’s this WSJ article by Dave Michaels:
A federal appeals court dealt a strong blow to Wall Street’s top cop this week, deciding that the Securities and Exchange Commission’s in-house courts don’t meet constitutional requirements. A three-judge panel of the U.S. Court of Appeals for the 10th Circuit, based in Denver, ruled 2-1 that the SEC’s process for hiring administrative-law judges violates a clause of the U.S. Constitution that governs presidential and other appointments. The 10th Circuit’s decision, issued Tuesday, diverges from an August ruling by the U.S. Court of Appeals for the District of Columbia Circuit, which upheld the SEC’s use of its in-house courts to air claims against people accused of violating securities laws.
The SEC’s five administrative-law judges are a cornerstone of the agency’s enforcement efforts, handling most routine cases. “This is the first time that an appellate court has accepted the argument that challenges the constitutionality of the administrative-law judge system,” said Stephen Crimmins, a partner at law firm Murphy & McGonigle in Washington. “It sets up a conflict with other courts of appeals on a very important issue and it would appear ripe for a U.S. Supreme Court review to resolve that conflict.” An SEC spokesman said the agency is reviewing the court’s decision and wouldn’t immediately have further comment.
How Emotional Baggage Will Cost You!
As I wrap up a nice year of self-discovery (being an empty nester helps!), I can’t help but chuckle over this hilarious promo from Air Canada about how it intends to start charging for emotional baggage in 2017:
Air Canada announced this morning that as of 2017, passengers will be required to pay an extra fee to transport any emotional baggage they happen to be carrying with them onto their flight. Jacqueline Villeneuve, head of communications, explains that the exact amount of the fee will depend on the nature of the emotional baggage, how much space it will take up on the flight, and likely it is to interfere with the other passengers.
“When it comes to homophobia, misogyny, and deep-seated racism, we’ll be charging $500 per issue,” she explains. “That kind of emotional baggage is quite heavy and nearly impossible to store safely. It takes tremendous effort on behalf of the cabin crew to make room for those kinds of issues.” “However,” Villeneuve continues, “low-level anxiety, trust issues, fear of commitment, a sense of entitlement, or garden variety anger due to a delayed flight or a lack of gluten-free options in Terminal B – we will be happy to transport those for you for just $250.”
IPOs: Accounting & Legal Fees
Check out this “Audit Analytics” blog for the latest on legal & auditing fee levels in IPOs. One member notes that the accounting & legal fee data “trend” suffers from small sample sizes and the nature of IPO companies in the past three years…
In my new “Broc Tales” blog (go ahead & “Subscribe” to get those stories pushed to you), I’ll eventually get around to telling wacky stories about some SEC Staffers that I worked with back in the day. I’m tickled pink that the WSJ is covering that type of sensational stuff too! Here’s the intro from a recent WSJ article:
The internal watchdog for the Securities and Exchange Commission has taken the rare step of accusing an employee of committing “attendance fraud,” saying the public official was paid $125,000 for more than 1,200 hours of work “that he did not work or account for.” The claim is included in separate reports published this year by the inspector general for the securities regulator, most recently in the agency’s semiannual report issued Nov. 14.
Wall Street movie villain Gordon Gekko executed trades on a cellphone larger than his head. Today’s traders can execute thousands of trades ina second on their iPhones. One might assume that the Securities and Exchange Commission has kept up, enforcing its rules with state-of-the-art software, algorithms, and computers.
Think again.
The SEC’s entire corporate-disclosure operation is based on the written document. For the most part, the agency collects financial information as documents, not as searchable data. Like many U.S. regulators, the SEC hasn’t kept pace with technological evolution. As a result, the firms it’s charged with overseeing are getting away with shady practices, investors are being denied easy access to key information, and, our economy is being put at risk.
To understand why the SEC’s low-tech disclosure system poses such a threat, consider the 2008 financial crisis. As the Treasury Department’s financial research director, Richard Berner, pointed out recently, “when Lehman Brothers failed six years ago, its counterparties could not assess their total exposures to Lehman. Financial regulators were also in the dark.”
The reason? Accessible data on Lehman just wasn’t available — not even to the SEC. Lehman had complied with relevant reporting requirements, but that information was trapped within thousands of documents, with no way to search across the whole. This lack of accessibility fueled a crisis that nearly toppled our financial system.
End of year & pushing out content that I’ve been meaning to blog about. Love this article entitled “The corporate Web site is dead, long live the new corporate Web site.” And in this video, learn about Coca-Cola on brand journalism – “Coca-Cola Journey” – and the death of the press release. Here’s an article analyzing the success of Coke’s journey into storytelling one year later…
The Long Shadow of the Pay Ratio Rule
Here’s something that Mark Borgesblogged a few weeks ago over on CompensationStandards.com:
Although the future of the CEO pay ratio rule is somewhat uncertain, the corporate community continues to move forward to prepare for its eventual effectiveness in 2017 (and the attendant disclosures in the 2018 proxy season). While much attention has been given to the potential impact of this new disclosure, both externally (the various constituencies that will see and react to this information) and internally (your employee population), an ancillary consequence of the disclosure has been less discussed. Specifically, I’m talking about the potential state and local provisions that may tie directly to a company’s pay ratio.
As you may recall, over the past few years there have been a couple of initiatives introduced that would link the operation of a new law or regulation to the disclosed CEO pay ratio. For example, in 2014 a California legislator introduced a bill that would have modified the state’s corporate income tax rate to a sliding scale based on a company’s pay ratio. The rate would have been as low as 7% percent on the basis of net income if the ratio was no more than 25 to 1. At the other end of the scale, the rate would have been as high as 13% if the ratio was more than 400 to 1. Although the bill passed out of two state Senate committees, ultimately it failed on the Senate floor (in a tight 19-17 vote). In addition, in the same year the Rhode Island legislature considered a bill that would have given preferential treatment in receiving state government contracts to companies whose pay ratio between its highest-paid executive and its lowest paid full-time employee was 31-1 or less.
While, to my knowledge, neither initiative has made it all the way through the legislative process, the underlying concept is alive and well. Yesterday, the New York Times reported that the City Council of Portland, Oregon had voted to impose a surtax on companies whose CEOs earn more than 100 times the median pay of their rank-and-file workers. As indicated in the Times, “[t]he tax will take effect next year, after the Securities and Exchange Commission begins to require public companies to calculate and disclose how their chief executives’ compensation compares with their workers’ median pay.”
The article to goes on to say that the idea may not be limited to Portland: “Portland officials said other cities that charge business-income taxes, such as Columbus, Ohio, and Philadelphia, could easily create their own versions of the surcharge. Several state legislatures have recently considered bills structured to reward companies with narrower pay gaps between chief executives and workers.”
It certainly appears that if the CEO pay ratio rule goes forward, we may see more proposed laws and rules that seek to “piggy-back” on the disclosure.
