Prominent LA attorney and UCLAW alum Jim Barrall has a great op-ed today in the WSJ's CFO Journal, in which he argues that:
Companies, investors and their advisers are waiting anxiously by their computers to see how the SEC deals with the enormous challenge of drafting rules under probably the most poorly conceived and drafted statute in the history of U.S. executive compensation.
The SEC will hold an open meeting Wednesday to consider whether to propose the long-awaited “CEO pay ratio” rules required by the Dodd-Frank Act, enacted in July 2010. The expectation is that the rules will in fact be proposed and will be published for public comment.
As most know, the law requires the SEC to adopt rules requiring that public companies disclose the ratio of the total compensation of their median compensated employees and the total compensation of their CEOs. The statute was inserted into the Dodd-Frank Act in a last minute markup in the Senate Banking Committee, with no debate and apparently without much thought or care. ...
The law not only has put the SEC in a difficult position and will impose new burdens and costs on public companies, sadly, it will not produce information which will be meaningful to investors in comparing CEO pay ratios among companies, because companies and their employment and compensation arrangements are all so different in many ways.
Go read the whole thing.
BTW, I discuss this provision in the chapter on executive compensation in: