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September 24, 2013
Sustainable Investors Applaud SEC Rules on Executive Compensation
    by Robert Kropp

A proposed amendment to existing rule will require corporations to compare CEO pay with the average compensation of all other employees.


In compliance with the statutory mandate of the Dodd Frank Wall Street Reform and Consumer Protection Act, the Securities and Exchange Commission (SEC) has proposed amendments to rules governing corporate disclosure of executive compensation.

If enacted after a 60-day comment period, the amendments will “require disclosure of the median of the annual total compensation of all employees of an issuer (excluding the chief executive officer), the annual total compensation of that issuer’s chief executive officer and the ratio of the median of the annual total compensation of all employees to the annual total compensation of the chief executive officer,” according to the SEC.

Sustainable investors such as the members of the Interfaith Center on Corporate Responsibility (ICCR) have demonstrated their active support for such amendments through the filing of shareowner resolutions in recent years, and US SIF: The Forum for Sustainable and Responsible Investment was quick to express its approval of the SEC proposal. US SIF CEO Lisa Woll stated, “Disclosure of information on executive compensation is a key measure to ensure sound corporate governance and will provide much-needed material information to shareholders and important information to other stakeholders. Shareholders and other stakeholders must know how their company’s internal pay comparisons could impact employee morale, productivity, planning and a range of labor related issues.”

And Timothy Smith of Walden Asset Management said, “Until now there has been no vehicle to compare the pay of a CEO to employees.”

“This information will provide yet another measure for investors and a company’s Board Compensation Committee to assess if top executives’ pay packages are deserved and reasonable. This is a timely rule to help investors assess pay packages,” Smith continued.

 

 
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