By Peter Schroeder - 12/03/13 11:06 AM EST
The heads of the nation’s biggest companies are pushing back against a financial rule that would require them to disclose how much more money they make than their employees.
In a letter sent to the Securities and Exchange Commission (SEC) Monday, the executives contended that the rule is useless to investors, costly to their companies and in need of revision. And once the rule is completed, companies will need another two years to prepare, they said.
“Changes are necessary in order to prevent the disclosures required by the proposed rules from being prohibitively costly and burdensome,” the CEOs said in a comment letter submitted by the Business Roundtable.
Advocates of the provision readily acknowledge that such a disclosure is intended to shame CEOs at a time when income inequality is a hot-button issue.
While House Republicans have proposed bills in the past to repeal the pay provision, Senate Democrats have resisted any legislative changes to Dodd-Frank. With regulators working on implementing that rule, among others, the business community is taking the fight to the SEC.
In their letter, the Roundtable pushes the SEC to adopt several changes to its rules that they say would make it easier to comply with. For example, they ask the SEC to require companies to only include the salaries of U.S. employees in determining the ratio. They contended that collecting data from employees in potentially dozens of countries would be prohibitively costly and time-consuming, and that several nations use different compensation systems that would make a comparison difficult.
They also pushed to limit salary data to just employees of the company and its wholly consolidated subsidiaries, as opposed to all subsidiaries. Furthermore, the SEC should give companies to flexibility to adjust the data to account for part-time or seasonal workers that could otherwise skew the data, they wrote.
The CEOs also ask for some more technical changes, including one that would limit the liability they could face in providing incorrect data to the SEC, noting the “significant number of estimates, assumptions and judgment” needed to put the data together.
And finally, the executives asked for the SEC to delay the rule for two years after it is finalized.