[House Report 112-142]
[From the U.S. Government Publishing Office]
112th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 112-142
======================================================================
BURDENSOME DATA COLLECTION RELIEF ACT
_______
July 12, 2011.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Bachus, from the Committee on Financial Services,
submitted the following
R E P O R T
together with
MINORITY VIEWS
[To accompany H.R. 1062]
[Including cost estimate of the Congressional Budget Office]
The Committee on Financial Services, to whom was referred
the bill (H.R. 1062) to amend the Dodd-Frank Wall Street Reform
and Consumer Protection Act to repeal certain additional
disclosure requirements, and for other purposes, having
considered the same, report favorably thereon without amendment
and recommend that the bill do pass.
Purpose and Summary
H.R. 1062, the Burdensome Data Collection Relief Act,
repeals Section 953(b) of the Dodd-Frank Wall Street Reform and
Consumer Protection Act (Public Law 111-203), which requires
all publicly traded companies to calculate and disclose for
each filing with the Securities and Exchange Commission the
median annual total compensation of all employees of the
company excluding the Chief Executive Officer (CEO), disclose
the annual total compensation of the CEO, and calculate and
disclose a ratio comparing those two numbers. The legislation
is needed to alleviate the enormous burden and complexity this
provision poses to publicly traded companies, with very little,
if any, corresponding benefit to investors.
Background and Need for Legislation
The disclosure requirements imposed by Section 953(b) of
the Dodd-Frank Act originated in the Senate, and were neither
discussed nor debated during the Conference Committee's
deliberations on the legislation. Following enactment of Dodd-
Frank, both Republican and Democratic Members of Congress began
to question the costs of complying with Section 953(b), the
utility of the information required to be disclosed, and the
feasibility of its implementation.
On September 24, 2010, the Financial Services Committee
received testimony regarding the difficulty and complexity that
will confront public companies in meeting these new
requirements. The Committee learned that public companies could
be required to calculate the median pay for thousands of
employees globally, and that compensation data is housed in
numerous computer systems and may not be sufficiently accurate
to comply with the disclosure rules. The Committee also heard
testimony that such disclosures may ultimately yield little
useful information to investors.
The Subcommittee on Capital Markets and Government
Sponsored Enterprises held a legislative hearing on H.R. 1062
on March 16, 2011. During that hearing, the Subcommittee
received testimony from Mr. Kenneth Bertsch, among others. Mr.
Bertsch, who testified on behalf of the Society of Corporate
Secretaries and Governance Professionals--a professional
association with more than 3,100 members who support the work
of boards of directors at more than 2,000 companies--stated:
``We believe that it will be virtually impossible for
large global companies to comply with Section 953(b) as
now written, and that implementation will impose a
substantial burden even on smaller non-global issuers.
More importantly, while we acknowledge a public policy
concern on pay gaps in the United States, we strongly
believe the required ratio will not be material or
meaningful to investors in company securities.
Accordingly, we believe the provision should not be
implemented at this time; rather this section should be
repealed and, if it is determined to be appropriate,
new more workable legislation should be enacted.''
Because the costs of compliance with Section 953(b) are
high relative to the benefits to investors from the
disclosures, if any, Representative Hayworth introduced H.R.
1062 on March 14, 2011 to repeal Section 953(b) so that
resources that would have been allocated to complying with this
requirement can be devoted to more productive economic
activities.
Hearings
On March 16, 2011, the Subcommittee on Capital Markets and
Government Sponsored Enterprises held a hearing entitled
``Legislative Proposals to Promote Job Creation, Capital
Formation, and Market Certainty,'' to consider H.R. 1062 and
four other bills. The following witnesses testified:
Mr. Kenneth A. Bertsch, President and CEO,
Society of Corporate Secretaries & Governance
Professionals
Mr. Tom Deutsch, Executive Director,
American Securitization Forum
Ms. Pam Hendrickson, Chief Operating
Officer, The Riverside Company
Mr. Damon Silvers, Policy Director and
Special Counsel, AFL-CIO
Mr. David Weild, Senior Advisor, Grant
Thornton, LLP
Mr. Luke Zubrod, Director, Chatham Financial
Committee Consideration
The Subcommittee on Capital Markets and Government
Sponsored Enterprises met in open session on May 3 and 4, 2011,
and ordered H.R. 1062 favorably reported to the full Committee
by a record vote of 20 yeas and 12 nays (Record vote No. CM-
26).
The Committee on Financial Services met in open session on
June 22, 2011 and ordered H.R. 1062 favorably reported to the
House by a record vote of 33 yeas and 21 nays (Record vote No.
FC-46).
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto.
On June 22, 2011, the Committee on Financial Services met
in open session and ordered H.R. 1062 favorably reported to the
House by a record vote of 33 yeas and 21 nays (Record vote No.
FC-46). The names of Members voting for and against follow:
RECORD VOTE NO. FC-46
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Bachus..................... X ........ ......... Mr. Frank (MA)... ........ X .........
Mr. Hensarling................. X ........ ......... Ms. Waters....... ........ X .........
Mr. King (NY).................. ........ ........ ......... Mrs. Maloney..... ........ X .........
Mr. Royce...................... X ........ ......... Mr. Gutierrez.... ........ ........ .........
Mr. Lucas...................... X ........ ......... Ms. Velazquez.... ........ X .........
Mr. Paul....................... ........ ........ ......... Mr. Watt......... ........ X .........
Mr. Manzullo.................. X ........ ......... Mr. Ackerman..... ........ X .........
Mr. Jones..................... X ........ ......... Mr. Sherman...... ........ X .........
Mrs. Biggert.................. X ........ ......... Mr. Meeks........ ........ X .........
Mr. Gary G. Miller (CA)....... X ........ ......... Mr. Capuano...... ........ X .........
Mrs. Capito................... X ........ ......... Mr. Hinojosa..... ........ X .........
Mr. Garrett................... X ........ ......... Mr. Clay......... ........ X .........
Mr. Neugebauer................ X ........ ......... Mrs. McCarthy ........ X .........
(NY).
Mr. McHenry................... X ........ ......... Mr. Baca......... ........ ........ .........
Mr. Campbell.................. X ........ ......... Mr. Lynch........ ........ X .........
Mrs. Bachmann................. X ........ ......... Mr. Miller (NC).. ........ X .........
Mr. McCotter.................. X ........ ......... Mr. David Scott X ........ .........
(GA).
Mr. McCarthy (CA)............. ........ ........ ......... Mr. Al Green (TX) ........ X .........
Mr. Pearce.................... X ........ ......... Mr. Cleaver...... ........ X .........
Mr. Posey..................... X ........ ......... Ms. Moore........ ........ X .........
Mr. Fitzpatrick............... X ........ ......... Mr. Ellison...... ........ X .........
Mr. Westmoreland.............. ........ ........ ......... Mr. Perlmutter... X ........ .........
Mr. Luetkemeyer............... X ........ ......... Mr. Donnelly..... ........ X .........
Mr. Huizenga.................. X ........ ......... Mr. Carson....... ........ X .........
Mr. Duffy..................... X ........ ......... Mr. Himes........ X ........ .........
Ms. Hayworth.................. X ........ ......... Mr. Peters....... ........ X .........
Mr. Renacci................... X ........ ......... Mr. Carney....... X ........ .........
Mr. Hurt...................... X ........ .........
Mr. Dold...................... X ........ .........
Mr. Schweikert................ X ........ .........
Mr. Grimm..................... X ........ .........
Mr. Canseco................... X ........ .........
Mr. Stivers.................... ........ ........ .........
Mr. Fincher................... X ........ .........
----------------------------------------------------------------------------------------------------------------
During the Committee consideration of H.R. 1062, the
following amendment was considered:
1. An amendment offered by Mr. Frank, No. 1, to define the
term ``employee'' for purposes of the median compensation
computation, to require an annual disclosure, and to limit
median compensation to cash compensation, was not agreed to by
a record vote of 25 ayes and 27 nays (Record vote No. FC-45).
RECORD VOTE NO. FC-45
----------------------------------------------------------------------------------------------------------------
Representative Aye Nay Present Representative Aye Nay Present
----------------------------------------------------------------------------------------------------------------
Mr. Bachus..................... ........ X ......... Mr. Frank (MA)... X ........ .........
Mr. Hensarling................. ........ X ......... Ms. Waters....... X ........ .........
Mr. King (NY).................. ........ ........ ......... Mrs. Maloney.... X ........ .........
Mr. Royce...................... ........ X ......... Mr. Gutierrez... ........ ........ .........
Mr. Lucas...................... ........ ........ ......... Ms. Velazquez.... X ........ .........
Mr. Paul....................... ........ ........ ......... Mr. Watt........ X ........ .........
Mr. Manzullo................... ........ X ......... Mr. Ackerman.... X ........ .........
Mr. Jones...................... ........ X ......... Mr. Sherman..... X ........ .........
Mrs. Biggert................... ........ X ......... Mr. Meeks....... X ........ .........
Mr. Gary G. Miller (CA)........ ........ X ......... Mr. Capuano..... X ........ .........
Mrs. Capito.................... ........ X ......... Mr. Hinojosa.... X ........ .........
Mr. Garrett.................... ........ X ......... Mr. Clay........ X ........ .........
Mr. Neugebauer................. ........ X ......... Mrs. McCarthy X ........ .........
(NY).
Mr. McHenry.................... ........ X ......... Mr. Baca........ ........ ........ .........
Mr. Campbell................... ........ X ......... Mr. Lynch....... X ........ .........
Mrs. Bachmann.................. ........ X ......... Mr. Miller (NC). X ........ .........
Mr. McCotter................... ........ X ......... Mr. David Scott X ........ .........
(GA).
Mr. McCarthy (CA).............. ........ ........ ......... Mr. Al Green X ........ .........
(TX).
Mr. Pearce..................... ........ ........ ......... Mr. Cleaver..... X ........ .........
Mr. Posey...................... ........ X ......... Ms. Moore....... X ........ .........
Mr. Fitzpatrick................ ........ X ......... Mr. Ellison..... X ........ .........
Mr. Westmoreland............... ........ ........ ......... Mr. Perlmutter.. X ........ .........
Mr. Luetkemeyer................ ........ X ......... Mr. Donnelly..... X ........ .........
Mr. Huizenga................... ........ X ......... Mr. Carson...... X ........ .........
Mr. Duffy...................... ........ X ......... Mr. Himes....... X ........ .........
Ms. Hayworth................... ........ ........ ......... Mr. Peters...... X ........ .........
Mr. Renacci.................... ........ X ......... Mr. Carney...... X ........ .........
Mr. Hurt....................... ........ X .........
Mr. Dold....................... ........ X .........
Mr. Schweikert................. ........ X .........
Mr. Grimm...................... ........ X .........
Mr. Canseco.................... ........ X .........
Mr. Stivers.................... ........ ........ .........
Mr. Fincher.................... ........ X .........
----------------------------------------------------------------------------------------------------------------
The following amendment and motion were also considered by
the Committee:
1. An amendment offered by Mr. Ellison, No. 2, to strike
the text of the bill and insert a new title and a GAO study on
pay ratios, was not agreed to by voice vote.
2. A motion offered by Mr. Garrett to move the previous
question on H.R. 1062 was agreed to by voice vote.
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the Committee has held hearings and
made findings that are reflected in this report.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee establishes the
following performance related goals and objectives for this
legislation:
The purpose of H.R. 1062, the Burdensome Data Collection
Relief Act, is to alleviate the enormous burden and complexity
imposed by Section 953(b) of the Dodd-Frank Wall Street Reform
and Consumer Protection Act, Public Law 111-203, which requires
all publicly traded companies to calculate and disclose for
each filing with the SEC the median annual total compensation
of all employees of the company excluding the CEO, disclose the
annual total compensation of the CEO, and calculate and
disclose a ratio comparing those two numbers. H.R. 1062 repeals
this section of the Dodd-Frank Act. Because the costs of
compliance with Section 953(b) are high in comparison to the
benefits to investors of the disclosures, if any, the objective
of H.R. 1062 in repealing Section 953(b) is to allow resources
that would have been allocated to complying with this
requirement to be devoted to productive economic activities.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee adopts as its
own the estimate of new budget authority, entitlement
authority, or tax expenditures or revenues contained in the
cost estimate prepared by the Director of the Congressional
Budget Office pursuant to section 402 of the Congressional
Budget Act of 1974.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the Director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
Congressional Budget Office Estimates
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
June 30, 2011.
Hon. Spencer Bachus,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 1062, the
Burdensome Data Collection Relief Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Dubary Brea
and Susan Willie.
Sincerely,
Douglas W. Elmendorf.
Enclosure.
H.R. 1062--Burdensome Data Collection Relief Act
H.R. 1062 would repeal a requirement that issuers of
certain securities include information about compensation of
their employees in disclosures required to be made to the
Securities and Exchange Commission (SEC). Based on information
from the SEC, CBO estimates that implementing H.R. 1062 would
not have a significant impact on spending subject to
appropriation. Enacting H.R. 1062 would not affect direct
spending or revenues; therefore, pay-as-you-go procedures do
not apply.
H.R. 1062 contains no intergovernmental mandates as defined
in the Unfunded Mandates Reform Act and would not affect the
budgets of state, local, or tribal governments.
The CBO staff contacts for this estimate are Dubary Brea
and Susan Willie. The estimate was approved by Theresa Gullo,
Deputy Assistant Director for Budget Analysis.
Federal Mandates Statement
The Committee adopts as its own the estimate of Federal
mandates prepared by the Director of the Congressional Budget
Office pursuant to section 423 of the Unfunded Mandates Reform
Act.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of the section
102(b)(3) of the Congressional Accountability Act.
Earmark Identification
H.R. 1062 does not contain any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9 of rule XXI.
Section-by-Section Analysis of the Legislation
Section 1. Short title
This section provides a short title to the bill by citing
it as the ``Burdensome Data Collection Relief Act.''
Section 2. Repeal of additional disclosure requirements
This section repeals Section 953(b) of the Dodd-Frank Wall
Street Reform and Consumer Protection Act (P.L. 111-203), and
provides that any regulations issued pursuant to such
subsection shall have no force or effect.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets and
existing law in which no change is proposed is shown in roman):
DODD-FRANK WALL STREET REFORM AND CONSUMER PROTECTION ACT
* * * * * * *
TITLE IX--INVESTOR PROTECTIONS AND IMPROVEMENTS TO THE REGULATION OF
SECURITIES
* * * * * * *
Subtitle E--Accountability and Executive Compensation
* * * * * * *
SEC. 953. EXECUTIVE COMPENSATION DISCLOSURES.
(a) * * *
[(b) Additional Disclosure Requirements.--
[(1) In general.--The Commission shall amend section
229.402 of title 17, Code of Federal Regulations, to
require each issuer to disclose in any filing of the
issuer described in section 229.10(a) of title 17, Code
of Federal Regulations (or any successor thereto)--
[(A) the median of the annual total
compensation of all employees of the issuer,
except the chief executive officer (or any
equivalent position) of the issuer;
[(B) the annual total compensation of the
chief executive officer (or any equivalent
position) of the issuer; and
[(C) the ratio of the amount described in
subparagraph (A) to the amount described in
subparagraph (B).
[(2) Total compensation.--For purposes of this
subsection, the total compensation of an employee of an
issuer shall be determined in accordance with section
229.402(c)(2)(x) of title 17, Code of Federal
Regulations, as in effect on the day before the date of
enactment of this Act.]
* * * * * * *
MINORITY VIEWS
Section 953(b) of the Wall Street Reform Act provides much-
needed transparency about relative compensation levels, within
a public company and between a company and its peers. It does
this by requiring each public company to disclose the ratio of
the total compensation of its CEO to that of its median-
compensated employee. This information is relevant to
investors, particularly those concerned about large
compensation differentials between CEOs and average workers or
relative compensation levels at industry peers, as well as to
labor groups and corporate governance reformers. This
information also is especially relevant because it will inform
shareholders' annual ``say-on-pay'' votes.
Some valid concerns have been expressed about the quarterly
frequency of the reporting requirement, the inclusion of
domestic and foreign-based employees, and the complicated
nature of identifying the median-compensated employee if all
forms of compensation are included. To address these concerns,
the Democrats offered an amendment that would (1) make the
disclosure annual instead of quarterly; (2) limit coverage to
domestic employees; and (3) identify the median-compensated
employee based on only cash compensation. These three changes
would have addressed the major concerns expressed about section
953(b) and thus rendered an outright repeal unnecessary.
This amendment was offered because Democrats are serious
about fixing identified problems with section 953(b) while
preserving the meaningful additional information contained in
the new disclosure it requires. By rejecting these changes (25-
27) in favor of an outright repeal, the Republicans are
depriving the public of a meaningful tool by which to assess
executive compensation practices within an individual firm and
between a firm and its peers.
Barney Frank.
Emanuel Cleaver.
Gary L. Ackerman.
Keith Ellison.
Carolyn B. Maloney.
Al Green.
Wm. Lacy Clay.
Brad Miller (NC).
Joe Donnelly.
Michael E. Capuano.
Stephen F. Lynch.
Andre Carson.
Luis V. Gutierrez.
Ruben Hinojosa.
Melvin L. Watt.
Gwen Moore.
Maxine Waters.