Taking full advantage of his time as acting chairman of the Securities and Exchange Commission, Michael Piwowar has announced that the agency’s much-maligned pay ratio rule, which he says is causing “unanticipated compliance difficulties,” is now under reconsideration.
The rule, pushed to the SEC by the Dodd-Frank Act and adopted in August 2015, requires a public company to disclose the ratio of the median of the annual total compensation of all employees to the annual total compensation of the chief executive officer. Critics have pushed back against the rule on both conceptual grounds—viewing the data demand as part of a name-and-shame campaign by unions, media, and activists—and logistical ones, especially for multinationals facing cost of living and pay differentials in low-income countries, various inflation rates, and currency fluctuations.
