WASHINGTON, D.C., Sept. 18, 2013 — Cara Woodson Welch, Vice President, Public Policy, News & Publications at WorldatWork, a global human resources association, issued the following statement in reaction to the U.S. Securities and Exchange Commission vote today advancing the CEO pay ratio regulations stemming from the Dodd-Frank Act:
“Today’s SEC vote advancing the CEO pay ratio regulations is unfortunate. If these proposed regulations are adopted they will force compensation professionals and companies to spend an exorbitant amount of time, money and resources to disclose information that shareholders already receive through existing public disclosures. These regulations will not enhance transparency for shareholders or potential investors. Instead, they are likely to add more noise and confusion to information conveyed to the public due to the fact that the ratio will be extremely difficult to understand without knowing the ins and outs of a company’s workforce and pay practices.
“While the ratio requirement may sound simple, in reality it will be extremely complicated — if not impossible — to accurately determine because every country defines pay and benefits packages in different ways. Although the SEC claimed that today’s proposed rules were designed to give companies flexibility and minimize compliance burdens, HR professionals will still have to spend significant resources to comply with this requirement, which will provide shareholders and potential investors with an ineffective measurement of a company’s financial welfare and executive compensation package.
“The bottom line is that the CEO pay ratio requirement included in the Dodd-Frank Wall Street Reform and Consumer Protection Act needs to be repealed. The U.S. House Committee on Financial Services did the responsible thing by passing legislation with bipartisan support to repeal this requirement. We had hoped the SEC would delay action on this rule and not force compensation professionals to comply with such a complicated and unnecessary regulation.
“While disappointed with today’s vote, WorldatWork intends to review the draft regulations thoroughly and will continue to strongly advocate for its members: compensation and executive compensation professionals who will be tasked with complying with the regulations. We intend to submit formal comments on the regulations for the SEC to review to improve the draft regulations to make the reporting requirement much simpler.”