Here Comes Another Rollback of Dodd-Frank Rules
The Securities and Exchanges Commission looks set to water down a rule forcing companies to disclose the pay gaps between their CEOs and average workers, in a fresh effort by the Trump administration to roll back what it sees as over-regulation of business during Barack Obama’s time as President.
According to The Wall Street Journal, the SEC’s acting head, Republican Michael Piwowar, has asked SEC staff to “reconsider implementation of the rule” that requires companies to calculate the ratio of CEO pay to that of the median worker.
The rule was incorporated in the Dodd-Frank act, which was the main plank of the Obama administration’s response to the perceived excesses that led to the financial crisis of 2008 and the recession that followed. It was intended to highlight inequality and act as a restraint on compensation awards for top executives.
However, Piwowar told the WSJ that companies “have begun to encounter unanticipated compliance difficulties that may hinder them in meeting the reporting deadline.”
Companies are supposed to start reporting the ratio next year, based on this year’s pay levels.
The SEC’s staff originally estimated that the initial cost to companies of complying with the pay-ratio rule could be as much as $1.3 billion.
The WSJ noted that delaying the rule’s introduction could be complicated by the fact that the SEC currently only has two confirmed commissioners. Democratic commissioner Kara Stein is against changing it, creating a deadlock, at least until a new SEC head is appointed.
President Donald Trump has nominated Wall Street lawyer Jay Clayton to take over at the commission and push through a “massive” cut in regulation. Last week, Trump signed an executive orders instructing the Labor Department to review the so-called ‘fiduciary rule’ that restricted the ability of pension advisers to recommend more expensive products to savers.