On the last day public comments were accepted for the Securities and Exchange Commission's controversial pay ratio rule proposal, some of the nation's top CEOs weighed in with their concerns and suggested changes.

In a letter dated Dec. 2, the Business Roundtable  – a pro-business, organization for CEOs chaired by Boeing CEO W. James McNerney, Jr., Honeywell CEO David Cote, and Dow Chemical CEO Andrew Liveris – expressed doubts that the Dodd-Frank Act's demand for compensation comparisons will provide investors with useful or accurate information. Key changes the group desires are more time to prepare for the rule and limiting the scope to just U.S. employees.

“The disclosures required by the proposed pay ratio rules will depend on issues having nothing to do with a company's performance, as the Commission acknowledges in the proposing release,” the group wrote. “Moreover, the proposed disclosure will exacerbate the growing length of required disclosures that make it difficult for investors to identify the material information that is relevant to their investment and voting decisions.”

Under the SEC's proposal to amend Regulation S-K, released on Sept. 18, companies would need to disclose a comparison of their CEO's pay to that of the median employee.

“If compliance is to be achieved on a cost-effective basis, the employees included in the identification of the median should be limited to U.S. employees,” the group wrote in its comment letter, explaining that some member companies have employees in over 75 countries and oversee as many as 100 separate payroll systems. “In order to identify a global median employee, companies will have to incur significant expense, including employee time and external advisor fees, as they seek to aggregate compensation data from incompatible systems and comply with foreign data privacy laws.”

Another concern voiced in the letter is that many foreign countries use unique methods of compensating their employees, such as profit-sharing arrangements and allowances for housing, transportation or family care. The proposed rules require non-U.S. employees to be included in the identification of the median employee, but prohibit adjustments to reflect non-U.S. approaches to compensation. For example, under the proposed rules, government-provided benefits are not permitted to be included, while in many countries outside the U.S. this is the prevalent practice.

The group urges that only those employed by the registrant and its consolidated subsidiaries, rather than all subsidiaries, should be used for identifying the median employee.

Also recommended is that the final rules permit registrants to annualize, or otherwise appropriately adjust, the compensation of part-time, seasonal and temporary employees. “We believe that the approach of the proposed rules, which would prohibit registrants from annualizing or adjusting the compensation of these employees, will skew the ratios of registrants that depend on large populations of these employees at the end of the year,” the letter says.

Additional time is necessary each year in order for companies to be able to gather the information needed to comply with the pay ratio rules and companies should be permitted to use pay data from the previous fiscal year. “The burden on company personnel during the first three months of each fiscal year is already significant due to year-end closing financial statements,” the letter says. “Companies frequently do not have final compensation data for employees until after the end of the applicable fiscal year.”

A pitch is also made for giving companies additional time following the effective date of the final rules in order to implement them for the first time. Among the efforts that will require more time are training personnel and retaining advisors and experts. Registrants should have at least two full years to implement the final rules, the group says.

“The proposed rules should not require that the pay ratio information be ‘filed' with the Commission, instead it should be ‘furnished,'” the letter adds. “Given the amount of data necessary to be considered and the significant number of estimates, assumptions and judgment calls necessary to produce the ratio, we believe it will be impossible for chief executive officers and chief financial officers to verify the information sufficiently in order to be able to make the certification the proposed rules would require. This is especially the case if the Commission determines to include non-U.S. employees in the final rules.”