As the initial batch of disclosures to meet requirements of the Securities and Exchange Commission’s pay ratio rule trickle in, activists are already flagging concerns.

The rule, Section 953(b) of the Dodd-Frank Act, requires that CEO pay be represented in comparison to that of the company’s median employee.

“Very similar companies are reporting dramatically different compensation numbers, pay ratios and median salaries to the SEC, and there does not appear to be any explanation for the discrepancies,” claims Public Citizen in a letter to the agency this week.

To implement the rule, the SEC “has provided generous latitude” when firms identify the median paid employee, the letter says. Sampling and reasonable estimates are permitted. The SEC notes that these and other compliance accommodations mean that the disclosure “may involve a degree of imprecision.”

“Acknowledging latitude, we are concerned that the SEC may regard this disclosure without adequate care, and therein, deprive investors of reliable information mandated by law,” the letter adds.

The advocacy group is asking the SEC’s Division of Corporation Finance to investigate “these unexplained discrepancies and take appropriate steps to rectify them.”

The letter documents a number of alleged irregularities and inconsistencies in the reported data, highlighting dramatically different reported figures from similar companies in the same industries—companies that have nearly identical business models, numbers of employees and compensation structures. As this is the first time such data has been collected and made available to the public under the SEC’s new pay ratio disclosure rule, Public Citizen is encouraging the Commission “to exercise appropriate diligence in oversight of this important new disclosure.”

“President Ronald Reagan famously said, ‘trust but verify,’ and that’s all we’re asking the SEC to do,” said Bartlett Naylor, financial policy advocate for Public Citizen’s Congress Watch division and author of the letter. “It’s possible that there are reasonable explanations for the discrepancies we found, but it’s also possible that some of the companies fudged their numbers or reported bogus data to mislead the public. The SEC should check the math so we know for sure.”

Among the irregularities Public Citizen flagged in the letter is that Citigroup reports that its median paid employee received $48,249. The company reports that the CEO received $17.8 million in its discussion of this ratio. It reports the ratio as 369-1.

But, the letter adds, Citi also reports elsewhere in its proxy statement that the CEO received $23 million, when combining all compensation. That would make the ratio 476-1.

In its discussion of the smaller CEO pay figure, Citi notes in a footnote that “this number is the sum of the 2017 total compensation reported in the 2017 Summary Compensation Table.” The larger number comes from a table labelled “2017 Named Executive Officer Compensation.” Citi explains: “In accordance with SEC rules, these awards are not reportable in the 2017 Summary Compensation Table because they were not awarded during 2017. They will be reportable next year in the 2018 Summary Compensation Table.”

“While either ratio is easily divined, we are concerned that Citi would represent a lower CEO pay level, and concomitantly, a lower ratio. For those attempting to compare ratios, the different results may confuse an analysis,” Public Citizen wrote.

The letter further notes that median pay at many banks varies considerably. At Bank of America, it is $87,115, while at Citigroup it is $48,249. These banks have similar employment numbers, including tens of thousands of tellers where pay is reportedly $25,000 to $35,000. One possible explanation, it says, may involve health insurance. Firms with higher median pay may be using high health compensation figures.

At Verizon and AT&T, the median pay figures vary considerably, the letter says. Verizon reports median pay of $126,623.3 AT&T reports median pay of $78,437.4 AT&T explains that it sampled employees among a set numbering 244,248, excluding 12,835 located in 53 other countries.

“Verizon explains that it added a number of benefits,” the letter says. “There may be some factors that account for this difference, such as lower wages in Texas, and use of contractors for lower wage jobs. But the SEC may wish to examine the data behind Verizon’s figures.

Also noted is that GEO Corp., which owns and operates private prisons, reported data that did not reflect its extensive use of paid inmate labor.

“In some cases, the appropriate remedy may be asking a company to explain and justify to the public its unusual employment and compensation circumstances. In other cases, the SEC should ask companies to correct misleading or inaccurately reported data,” Naylor says. “As a matter of due diligence, the SEC should apply a little extra scrutiny to make sure companies are complying with the rule and accurately representing their compensation data.”

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