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State Treasurers Press SEC Nominee, Congress on CEO Pay Disclosure Rule

Officials from four states send letter to Congress on executive pay rule


WASHINGTON -- Treasurers and state officials from the states of Pennsylvania, Rhode Island, California, and Illinois today sent a letter to Securities Exchange Commission (SEC) Chair nominee Jay Clayton and senior members of the Senate Banking and House Financial Services Committee urging them to keep in place a SEC rule requiring disclosure of the ratio between CEO and median worker pay at publicly traded companies.

Clayton will likely receive a confirmation vote on the Senate floor in the next week. During his confirmation hearing in March, Clayton was vague about whether he would keep the SEC rule intact. The state officials consider the rule pivotal in making smart investments with state funds, expressing their opposition to any efforts by Congress or regulators to “repeal, weaken, or delay implementation” of the rule.

The letter was signed by California State Treasurer John Chiang, Illinois State Treasurer Michael Frerichs, Pennsylvania State Treasurer Joe Torsella, Rhode Island State Treasurer Seth Magaziner, and Pennsylvania Auditor-General Eugene DePasquale.

The letter, which can be read online here, reads in part: “As government officials responsible for our respective state’s pension and investment funds, it is our responsibility to protect the retirement security of [tens of millions] of teachers, law enforcement officers, firefighters, and other public employees and their families. We want companies in our portfolios to be successful, and research indicates that extreme gaps between CEO and worker pay can reduce financial performance by undermining employee morale, which in turn reduces productivity.”

Although the SEC rule was finalized in 2015 and mandated by Congress through the Dodd-Frank Act in 2010, it is now under threat. In February, Acting SEC Chair Michael Piwowar opened up the rule to a new round of public comments and directed his staff to “reconsider implementation.”

Clayton was grilled about the rule during his confirmation hearing, but refused to comment on whether he would keep the rule in place or continue Piwowar’s apparent efforts to undermine it. In a testy exchange, Sen. Bob Menendez (D-NJ) told Clayton that his answer that he “did not know” what he would do about the rule as chair was “unacceptable.”

House Republicans have also indicated they would like to eliminate the disclosure regulation as part of a broader Dodd-Frank repeal effort. Corporations are supposed to begin reporting their pay ratios in early 2018.

“A critical function of a company’s board of directors is making thoughtful and appropriate executive pay decisions,” said Rhode Island Treasurer Seth Magaziner, one of the letter’s signers. “As long-term shareholders, having access to pay ratio data is an important part of understanding how the board is making those decisions.”

National economic justice organization Center for Popular Democracy helped coordinate the signing of the letter. “During a massive economic recession and amidst deep economic inequality, Congress required the SEC to put a rule in place that allows state officials, taxpayers, and the public to know which companies are paying their workers fairly and which are not,” said Jordan Haedtler, campaign manager at the Center for Popular Democracy.

“It’s unconscionable that Republicans are targeting this rule, and we are glad to see state officials from around the country speaking out to defend it. The Senate should continue to press Clayton for answers and insist on nominees to the SEC who will be vigilant watchdogs of Wall Street,” he said.




The Center for Popular Democracy promotes equity, opportunity, and a dynamic democracy in partnership with innovative base-building organizations, organizing networks and alliances, and progressive unions across the country. CPD builds the strength and capacity of democratic organizations to envision and advance a pro-worker, pro-immigrant, racial justice agenda


Contact: Jordan Haedtler, jhaedtler@populardemocracy.org, 650-400-4116