Why Is the SEC Helping Target CEOs?

The SEC is now requiring information to be reported that could easily allow Occupy Wall Street types to target CEOs.

The Los Angeles Times reports, “How much do CEOs make compared to their workers? We’ll know in 2018.”

The Securities and Exchange Commission approved a new rule Wednesday morning requiring publicly traded companies to disclose the pay gap between chief executives and their workers.

Chief executives’ pay is already disclosed in company proxy statements, so what’s new is that firms will now have to publish their median worker compensation, or the number at which half of employee pay is above and half is below.

That figure will then be compared to the chief executive’s compensation, starting in 2017, with financial statements released the following spring.

The requirement passed by a 3-2 vote. Commissioners Daniel Gallagher and Michael Piwowar, both Republicans, cast the no votes.

And what is the reason for this new reporting requirement?

Commissioner Kara Stein, who voted in favor of the rule, said the ratio would be “valuable” to investors and could give insight into how companies manage human capital.

How interesting. So if investors want this information, why couldn’t they just ask for it? I see no reason why the government has to mandate what information a company should publish. Obviously the government should punish companies that lie and thus put out fraudulent figures to investors or potential investors. But if investors want companies that reveal this ratio, and companies want investors, then the companies have an incentive to provide the information.

Why would the Republicans oppose a rule that would help investors? Are Republicans known for being opposed to the interests of investors?


This rule is simply to provide a way for leftists to target and shame and otherwise attack CEOs.

I think the way CEOs are paid is vastly overrated. But that’s not because the CEOs are doing anything wrong. Until we get rid of the river of debt that the Federal Reserve constantly stimulates, we can’t possibly know where CEO pay and worker pay should stabilize. Right now, the market is flooded with misleading signals due to fiat money.

People are constantly talking about how the ratio between the CEO and the workers used to be so much less than today. But no one ever argues that CEOs were less interested in being paid more back then. Plainly, greed has nothing to do with the discrepancy. Something else is at work.

And why should CEO’s be singled out from all the other massively rich people? As Mark Horne wrote last year:

We sometimes hear about the income made by movie stars or (more often) professional athletes, but almost never with the same kind of implied hostility.  The idea is that this money is somehow stolen from, or at least owed to, the “average workers.” This argument is never used to actually take money from the CEO and give it to the average workers. Instead it is used to raise tax rates on “the rich”—who by sleight of hand are people making far less than the CEOs—so that the money goes to the Federal Government. CEOs are vilified in order to justify confiscating the wealth of a different group of people and give it to yet another group of people.

The SEC is deliberately throwing lit matches into a dry forest by making this rule. We already have enough sparks flying on this issue.