The Advisors' Blog

The SEC’s proposed changes to “filer status” rules could spell the end of mandatory pay ratio disclosures for many companies, along with many other executive compensation disclosures. As Meredith blogged last week, there are steps companies can begin taking now to evaluate whether and how they would adjust their disclosures if the proposed amendments are adopted.

Several of the factors that Meredith flagged in her blog boil down to “how will our investors react?” You probably won’t be surprised to hear that there are some vocal groups who want to retain the current disclosures. For example, the Interfaith Center on Corporate Responsibility (ICCR) recently published a report titled “Excessive Executive Compensation: Investor Guidance” – and an accompanying “Investor Statement on Excessive Executive Compensation.”

The statement is signed by a coalition of investors with more than $113 billion in AUM. It calls on investors to strengthen oversight, transparency and alignment in executive pay, including by reviewing their proxy voting records and guidelines on executive compensation, and engaging with companies and across the investment ecosystem to support improved practices.

Among other things, the report argues that a company’s pay ratio is decision-useful information for investors. The announcement about the report says:

– Need for Clearer Voting Thresholds: The report also showcases investors who have adopted quantitative cutoffs, such as voting against any pay package where the CEO-to-median-worker ratio exceeds 100-to-1, or where total executive compensation exceeds $10 million.

The report predates the SEC’s proposal to simplify the filer status framework, and ICCR has not yet submitted a public comment on the rule. There are only about 15 comments on file so far – we will continue to track them as they roll in. The comment deadline is July 20th.

– Liz Dunshee