In response to a February 6 statement and request for comment made by U.S. Securities and Exchange Commission (SEC) Acting Chairman Michael Piwowar as he reexamines the pay ratio rule, the National Association of Manufacturers (NAM) submitted comments March 23 urging the SEC to indefinitely suspend implementation of the rule while encouraging Congress to repeal this onerous requirement. The NAM also joined with several other trade associations in a joint letter to the SEC, voicing unified opposition to the pay ratio requirement.
The pay ratio rule, which stems from a requirement found in Section 953(b) of the Dodd-Frank Act, was finalized in August 2015 to require public companies to disclose the ratio between the median annual total compensation of all employees to the annual total compensation of the chief executive officer. During the rulemaking process, the NAM submitted multiple comments opposing the rule because it provided no benefit to shareholders while adding significant burden and compliance costs for manufacturers. In his statement, Piwowar explained that he has heard from companies about the unexpected challenges and difficulties they are facing in implementing the SEC’s pay ratio rule and is seeking further details to determine if relief is needed.
The NAM’s letter details examples of how manufacturers of all sizes are devoting time and resources, adding up to millions of dollars in additional costs—in one case as much as $18 million—to comply with this unnecessary requirement that has no benefit to shareholders. The NAM fully supports Piwowar’s efforts to reconsider this unnecessary rule, especially as concerns are mounting that some jurisdictions, like Portland, Oregon, are considering using the pay ratio data results to add an additional layer of taxation on corporations.
The NAM will continue to work with the SEC and Congress to roll back this unnecessary and costly requirement.
Before joining the NAM, Crooks served as senior manager of government affairs for Financial Executives International, where she advocated on behalf of the association’s membership of senior-level business executives on tax, corporate treasury, pension and benefit issues. Previously, she worked as a legislative assistant to Rep. Michael Castle (R-DE), a senior member of the House Committee on Financial Services. Christina handled financial services issues for the Congressman during consideration of the Dodd-Frank Act, and also worked on small business and judiciary issues. Christina earned a B.A. in Political Science from the University of Delaware and a M.A. in Political Science from American University.
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