The Securities and Exchange Commission's proposal Wednesday to force public companies to disclose the difference in pay between their chief executive officers and other employees drew both cheers and jeers, pitting labor unions against the U.S. business community.
The AFL-CIO and International Brotherhood of Teamsters praised the SEC's plan, while the U.S. Chamber of Commerce and the Center on Executive Compensation expressed frustration. Mandated under the 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act, the rule, if implemented, would order companies to disclose their CEO’s annual compensation, the median annual compensation of all their other workers, and the ratio between those figures. The SEC said it would be up to companies to decide what methodologies they would use to calculate their employees' median annual compensation.
Luis Aguilar, who was among the SEC commissioners who supported the proposal in a 3-2 vote Wednesday, said in remarks prepared before the vote that reporting the ratio "can provide a valuable new perspective for executive compensation decisions.