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Few companies are likely to use an exemption that many sought when the SEC put the final touches on its rule requiring disclosure of the gap between CEO and median worker compensation.
Hundreds of publicly traded companies will soon disclose their pay ratios for the first time under the Securities and Exchange Commission’s 2015 rule, required by the 2010 Dodd-Frank Act.
Business advocates pressed the SEC as it drafted the rule to include a way for companies to avert potential privacy violations when collecting information on non-U.S. workers. The SEC responded to what it called “significant concerns” by placing a partial exemption in the final rule. But the extra legwork and added disclosure required has turned off most companies to its use.
“We don’t have one client who has used it,” Deborah Lifshey, a managing director at pay consultant Pearl Meyer, told Bloomberg Law. “And that’s because there are so many hoops to jump through to use that exemption that it’s virtually impossible.”
“It’s just too hard to get the exemption, so I don’t think you’ll see anyone using [it],” Lifshey said.
“It’s kind of funny because that’s one that a lot of us who wrote comment letters to the SEC, we all rallied for it,” Lifshey added. “So, they gave us a data privacy rule, but it’s not really usable.”