Sen. Al Franken (D- Minn.) is upset with the Securities and Exchange Commission for missing the March 31 provision deadline of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The CEO Pay Provision of the Dodd-Frank Act requires companies to disclose compensation data to regulators, including pay-for-performance and the ratio between the CEO’s total compensation and the median total compensation for all other company employees.
To Franken, the Pay Rule addresses the largest contributing factor which led to the financial crisis of 2008 – runaway CEO compensation.
The Securities and Exchange Commission missed the March 31 deadline to which Franken said, “This is just another example of the SEC not acting on the authority we gave them under Wall Street reform.”
Proponents of the CEO Pay Rule blame corporate lobbyists for the delay.
Opponents of the CEO Pay Rule see it as a punitive measure designed to shame CEOs and push a larger political and social agenda.
In a letter to the SEC from the House Committee on Financial Services committee members argue, “pay ratio disclosures do not provide useful information about a company’s operations, performance, or pay practices, such disclosures will be immaterial.”
Committee members went on to say that the CEO Pay Rule puts a compliance burden upon companies which would “require a substantial diversion of company resources from productive investment to compliance activities.”
The committee says the CEO Pay Rule does nothing to advance the congressionally-mandated mission to promote financial stability nor does it address the underlying factor that contributed to the financial crisis: the over-reliance on flawed credit ratings by subprime lenders.
The measure designed to protect American consumers from abusive financial practices was written and passed by some of the largest benefactors of the subprime lending crisis which left U.S. taxpayers holding the $475 billion bill.
While Franken with pitchfork and flame is on the hunt for runaway CEOs, those who cannot account for $6 billion missing from the State Department or $500 million missing in aid from Yemen demand financial accountability and transparency of publicly held companies. They have made themselves the watchdogs over a CEO-consumer-employee relationship which is voluntary.
No employee is being exploited for profits when he agrees to work at the agreed upon wage. No consumer is being squeezed when she accepts the price of Charmin with swipe of her debit card.
How does data mining CEOs and choking consumerism with compliance burdens benefit the little guy? It does not.
Compliance burdens only slow the pace in which goods and services are brought to market. The cost of compliance is shifted unto the consumer making it more cost prohibitive to purchase milk, bread and Big Macs than before regulation.
When companies are over-regulated they cannot compete. Employees are laid off. Businesses close.
The producers lose. Consumers lose. The predators win. What do they win? More dependence on them for sustenance and sanctuary.
If Al Franken wants to go on a witch hunt for CEOs I suggest he start with his former boss, Lorne Michaels. I wonder what he makes in ratio to his SNL set designers and studio pages.