WASHINGTON – In a move that received little press, the Financial Services Committee of the U.S. House of Representatives recently passed a proposed bill which aims to remove a requirement that public companies disclose their ratio of CEO pay to median pay of employees.
H.R. 1135, or the "Burdensome Data Collection Relief Act", was passed by a vote of 36 - 21, with 31 Republicans and 5 Democrats supporting. If passed through the Senate, the bill would effectively repeal section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was passed in 2010 in response to the financial crisis of 2008.
The repealed provision stated that companies are required to reveal "(A) the median of the annual total compensation of all employees of the issuer, except the chief executive officer (or any equivalent position) of the issuer; the annual total compensation of the chief executive officer (or any equivalent position) of the issuer; and (C) the ratio of the amount described in subparagraph (A) to the amount described in subparagraph (B)."
Critics of current levels of executive pay believe that public awareness of the gap between executive and the average worker of a company - and the arguably negative publicity that would result - could help put pressure on companies to lower executive pay.
Introduced in March, the bill passed committee June 19 and awaits a floor vote.
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