March 24, 2015
58 House Dems Urge SEC to Finalize Pay Ratio Rules
– Broc Romanek, CompensationStandards.com
Hat tip to Jim Hamilton’s blog & the Society of Corporate Secretaries for pointing out that 58 Democratic members of Congress sent this letter last week to SEC Chair White urging the agency to finalize the CEO/employee pay ratio rules in early 2015. As noted on this press release, the letter cites research that purportedly correlates higher pay ratios with CEO risk-taking, and suggests that lower ratios equate to long-term investment:
Research shows the higher the CEO to median worker pay ratio, the more likely that CEO is to pursue the kind of risky investments that brought on the global financial crisis. The Institute for Policy Studies found that nearly 40 percent of the highest-paid CEOs were fired, sought a bailout, or forced to pay fraud-related fines. Furthermore, a lower ratio of CFO to median worker pay implies more investment in human capital and a longer-term outlook. According to the Center for Audit Quality’s annual investor survey, 46 percent of investors say they consider CEO compensation in their decision making.