SEC Lacks Economic Justification For Pay-Disclosure Rule
December 12, 2013, 7:01 PM EST
Law360, New York (December 12, 2013, 7:01 PM EST) -- The comment period has closed on the U.S. Securities and Exchange Commission’s proposed rule requiring disclosure of the ratio of CEO pay to the median pay of all workers in the firm. In a public interest comment filed with the SEC, I argue there is little economic justification for this disclosure, which appears to be motivated by a desire to “shame” companies with high wage inequality inside the firm.
While the benefits are tenuous, the costs are clear. Firms must already report on CEO pay, but...
Financial Services Law360 UK provides breaking news and analysis on the financial sector. Coverage includes UK and European Union policy, enforcement, and litigation involving banks, asset management firms, and other financial services organizations.