The Institute for Policy Studies today joined labor, consumer, social investment, and other groups in applauding a long overdue vote by the Securities and Exchange Commission to implement a new CEO-worker pay ratio disclosure rule.

“We finally have an official yardstick for measuring CEO greed,” said Institute for Policy Studies analyst Sarah Anderson. “This is a huge victory for ordinary Americans who are fed up with a CEO pay system that rewards the guy in the corner office hundreds of times more than others who add value to their companies.”

“The new SEC rule could pave the way for further reforms that go beyond disclosure,” said IPS veteran compensation analyst Sam Pizzigati. “At the state level,lawmakers are already moving to subject corporations with wide CEO-worker pay gaps to a higher corporate income tax rate – or give corporations with more moderate pay divides a better shot at gaining government contracts.”

“This new ratio information,” Pizzigati adds, “will make it easier to ensure that our tax dollars do not enrich corporations that are widening our economic divide.”

Pizzigati and Anderson have been calling for CEO-worker pay disclosure for many years, including in this 2008 article in The Nation.

The 3-2 SEC vote came just over five years after the 2010 Dodd-Frank Act mandated — in section 953(b) — that America’s publicly traded corporations annually report the ratio between their chief executive and median worker compensation.


The Opponents

Corporate lobby groups and Republicans have fought aggressively to repeal or water down this section of Dodd-Frank. In congressional testimony last week, former Texas Senator Phil Gramm attacked it as nothing but “political demagoguery.”

The U.S. Chamber of Commerce has charged that the disclosure rule would result in “fundamentally flawed and misleading statistics” and claimed large companies would each need to spend an average of 1,825 hours, at a cost of $311,800, to produce the ratio. They and other corporate lobby groups argued the SEC should allow firms to exclude all foreign and part-time workers.


The Supporters

In her opening remarks today, SEC Chair Mary Jo White noted that the SEC has received more than 287,400 public comment letters on the proposed CEO-worker pay ratio rule. An overwhelming majority of these were supportive. Members of Congress also pushed the SEC to finalize the rule. Rep. Keith Ellison (D-Minnesota) delivered a letter signed by 47 House members to the SEC Chair on July 27, urging swift action. In June, Senator Elizabeth Warren (D-Mass.) sent her own scathing letter, complaining of continued SEC delays on this and other Dodd-Frank rules. The AFL-CIO upped the pressure by submitting a Freedom of Information Act request for relevant SEC records.


The Outcome

In the end, the SEC inserted minor loopholes, including allowing companies to exclude up to five percent of their overseas workers from the pay-ratio calculation, despite Section 953(b) of Dodd-Frank explicitly referencing “all employees.” The SEC also decided to allow companies to calculate the median employee only once every three years, instead of every year. Neither of these loopholes are likely to result in significant differences in the median. IPS pay analysts were disappointed to learn today that the rule will not go into effect until fiscal year 2017, and so the first pay ratio numbers will not appear until the 2018 proxy season.


IPS executive compensation experts available for comment:

  •  Sarah Anderson directs the Global Economy Project at the Institute for Policy Studies. She has co-authored 21 IPS annual reports on executive compensation and regularly contributes commentaries on this issue to, Huffington Post,, and other outlets. Contact: sarah@ips-dc.org202 787-5227 (office) or 202 299 4531 (cell).
  •  Sam Pizzigati, an IPS associate fellow, edits Too Much, an online weekly newsletter on excess and inequality. His most recent book: The Rich Don’t Always Win: The forgotten triumph over plutocracy that created the American middle class, 1900-1970 (Seven Stories Press). Contact: or 301-728-4182 (cell).

IPS SEC comments on 953b: October 2013, March 2011

The Institute for Policy Studies has conducted path-breaking research on executive compensation for more than 20 years. On September 2, 2015, the Institute will release the 22nd annual IPS Executive Excess report: “Money to Burn: How Our CEO Pay System is Accelerating Climate Change.”

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