By Silla Brush - 03/23/10 01:38 AM EDT
Financial overhaul legislation that passed the Senate Banking Committee on Monday requires publicly-traded companies to report how much average employees earn compared with company executives.
The legislation would require publicly-listed companies to submit more detailed reports on compensation to the Securities and Exchange Commission (SEC) than under current rules. The reports would include median employee salary, CEO compensation and the ratio of the two.
The requirement was added in an amendment that passed easily on Monday on a party-line vote. The change was sought by Sen. Robert Menendez (D-N.J.).
Lawmakers are looking to rein in executive pay practices that lead to excessive risk and discourage long-term investments. The ratio of average and CEO pay could provide a stark comparison of pay practices across industries.
Menendez also successfully sought a change in the legislation that bans brokers from voting uninstructed client shares in "say on pay" decisions at the corporate level. Labor unions have been critical of the practice, arguing that it allows brokers to unduly influence corporate votes.