Pressure on SEC to Implement Rule Disclosing CEO to Median Worker Pay

Controversy over rule to disclose CEO to median worker pay rule.

ByABC News
March 13, 2012, 2:54 PM

March 13, 2012 — -- Danny Stauffer of Milwaukee has been working as a baker at Walmart for almost five years. His salary is $9.40 an hour, up from a starting wage of $7.11.

Stauffer, 26, said has tried to work full-time at the company but hasn't had success.

"I actually like the work I do," he said. "The people I work with, the work itself – they're all great. It just doesn't pay the bills."

A provision of the Dodd-Frank financial regulatory reform act proposes that public companies disclose the ratio of the CEO's pay to that of the median salary of company workers. But two years after Dodd-Frank was passed, the Securities and Exchange Commission (SEC) has not yet implemented the rule or initiated the rule-making process. Business groups have opposed the rule, while advocates for corporate reform have pressured the regulatory agency to work quickly.

Sen. Robert Menendez, D-N.J., the author of the provision, Section 953(b), and other members of Congress signed letters to the SEC chairwoman, Mary Schapiro, last week, urging the agency to move forward with the rule-making process.

"It might embarrass some companies to reveal that they pay their CEO in the range of 400 times what they pay their typical worker, but that's important information for both investors and workers to know," he told ABC News.

Last week, Schapiro testified before the House appropriations committee, saying the agency has heard from "a lot from stakeholders" and conducted "many meetings" on the provision.

Schapiro said the statute is "quite prescriptive" and "creates some challenges I think for us as we write the rule to not have a deadline, so we haven't missed a deadline yet, although there's obviously interest in our -- in our getting this done.

"But some of the challenges relate to the fact that many companies have hundreds or thousands or tens of thousands of employees overseas, how to count them, how to arrive at [a median] compensation number, whether to count employees who are part-time, or employees of joint ventures, for example," she said.

Dozens of organizations have opposed the provision, including the U.S. Chamber of Commerce, National Retail Federation, National Restaurant Association and the Center on Executive Compensation. Those were among the organizations that signed a letter to Schapiro in January, offering four recommendations to the SEC. Those suggestions include holding a roundtable discussion of experts to understand the pay ratio consequences, gathering input, identifying alternative approaches and submitting the proposed rule for review and understanding the cost-benefit implications of the requirement.

Stauffer, who is a member of the Walmart employees group, OURWalmart, said he would support the Dodd-Frank provision to provide more disclosure to not only shareholders but to the chief executive officers of companies across the U.S.

"Obviously there's only one of them and a lot of us, but it shows how hard we have to work, how much profit there is to go around, and how little we see," Stauffer said. "It does not make me happy that the CEO gets to enjoy such a great life off of our labor."

Stauffer said he dropped out of college because he struggled to keep up with his tuition on his income. He said he has tried to find a second job to support himself while living in a basement and receiving public assistance.

If Stauffer was working full-time for 40 hours a week, he would make about $19,552 a year.

According to Walmart, $12.14 is the average wage for a full-time hourly associate in a Wisconsin Walmart store and nationally it is $12.40, neither of which take into account full-time salaried employees or quarterly bonuses for which hourly store associates are eligible. A year's wages would be $25,251 and $25,792, respectively.

The total compensation for Walmart's CEO Michael Duke was $18.7 million, a drop of 2.7 percent, for the last fiscal year which ended in January 2011, the company reported last April. His salary increased 2.4 percent to $1.2 million.

In a statement to ABC News, Walmart said: "When you look at pay, benefits and opportunities for advancement, Walmart offers some of the best jobs in the retail industry. Last year, we promoted more than 161,000 associates and roughly three-fourths of our store management teams started out in hourly positions with the company."

"It's important to note that 'OURWalmart' is a union-backed, union-funded organization attempting to further its own political and financial agenda. They do not represent our associates at any of our locations. We've seen other places where they have pitched associates to media for stories and, largely, the experiences they offer up typically don't reflect the norm within our base of 1.2 million associates in the U.S."

Walmart said it hasn't taken a position on the pay disclosure rule.

Though Walmart is known as one of the biggest companies in the U.S., its CEO is certainly not the highest paid chief executive in the country. Michael Duke ranks at no. 82 in Forbes' list of highest paid chief executives.

When asked for the chances of the rule's implementation in the face of strong opposition, Tricia Enright, communications director for Sen. Menendez said, "Cleary, most big companies won't comply with this law unless they are forced to do so – even though that compliance should not be burdensome. It will be implemented, the only question is when, which is why Senator Menendez is pushing and will continue to push until it's done."