Legal News

SEC Official Wants Companies to Disclose Salary Inequities to Shareholders
Download PDF

In a rare move, on Wednesday, SEC Democratic Commissioner Luis Aguilar issued a statement urging companies to provide shareholders more details on compensation packages voluntarily, rather than wait around until SEC issues rules to mandate such disclosures.

In his statement, Aguilar said that it would be a sign of good governance if companies voluntarily started making disclosures of salary packages, because shareholders deserve knowledge of how the pay of lower-level employees compare with that of the CEO, or how long-term performance of companies tally with executive pay packages.

Aguilar’s comments, made just before the Proxy season when companies hold their annual shareholder meetings can compel some companies to make additional disclosures rather than have SEC issue a rule about that.


Aguilar said, “The relative pay of different classes of employees, such as the ratio between CEO compensation and median pay, can… create risks to an enterprise, including the risk of employee, customer, and shareholder discontent.”

While such disclosures of salary packages and relation to long-term company performance had been one of the key provisions of Dodd-Frank reforms, the SEC has refrained from issuing the rules in the face of opposition from powerful lobbies and companies who say revealing the pay ratio would put big burdens on companies.

Last year, business groups had sent a letter to the SEC remarking, “Obtaining the data will be difficult and time-consuming as the definition of compensation among countries will vary widely, and companies will face difficulties attempting to rationalize compensation with currency fluctuations.”

Get JD Journal in Your Mail

Subscribe to our FREE daily news alerts and get the latest updates on the most happening events in the legal, business, and celebrity world. You also get your daily dose of humor and entertainment!!

SEC spokesman John Nester said that there is no statutory deadline for issuing the rules to force revealing salary packages and comparisons, but the SEC staff is “working had to get a recommendation to the commission for consideration.”

Last year, a group of Democrats from the U.S. House and Senate had urged the SEC to hasten the process, observing that “a company’s treatment of their average workers is not just a reflection of their corporate value system, but is material information for investors.”

However, currently, after SEC Chairman Mary Schapiro left the agency, the SEC has two Democrats and two Republicans on board – locked in a stalemate.


  1. Tim Morgan

    February 22, 2013 at 11:12 am

    They’re complaining it’s too hard to count the money? Point proven: excessive executive pay is dangerous and out of control– especially fat rewards for poor performance.

    In addition, it’s destroying the world economy, as the increasing gap between the rich and everybody else shrinks markets.

  2. mike naraine

    April 17, 2013 at 10:07 am

    April17, 2013.
    Just read your article on the Internet.
    I have been at several Ford’s shareholders meeting in Wilmington, Delaware,asking Mr. Ford to investigate the salary inequity at its Canadian plants.
    It is an irrefutable fact that Ford keeps its Black supervisors at the entry level grade 7 for their entire working lives.(more than three decades)
    This is evident from their own documents received under disclosure in a civil matter.
    I wiil be attending the meeting on thursday May 9, 2013 in Wilmington asking Mr.Ford to investigate this hideous crime.
    mike naraine

Leave a Reply

Your email address will not be published.

12 − 1 =


Most Popular


To Top