Despite vociferous opposition by many business leaders, the Securities and Exchange Commission on Wednesday morning approved a new rule that requires companies to disclose a comparison of their CEO's pay to that of the median employee.

Under the SEC's rule proposal, companies will need to produce a median compensation figure for all workers, domestic and overseas. In a concession to opponents, it will allow the use of statistical sampling to derive that figure. The methodology used must be disclosed to investors. This calculation will then be revealed as a ratio to CEO pay.

The rule, mandated by the Dodd-Frank Act, has been endorsed by many consumer and shareholder advocacy groups, as well as labor unions. Opposition has been plentiful, however, with critics that include many executive compensation consultants and the U.S. Chamber of Commerce.

In a statement, Statement by Timothy Bartl, president of the Center On Executive Compensation, said his group will continue to work for its repeal in Congress.

“The SEC's decision to put the pay ratio rulemaking, which has no deadline, before other provisions of the Dodd-Frank Act that have deadlines and more directly impact financial stability makes clear that this is a political disclosure, rather than a substantive one,” he said.

“As with any rule, the impact of the Commission's proposed rule can only be judged after obtaining the input of companies on their ability to comply with this complex requirement, combined with expense, diversion away from more productive use of employee time and whether investors have been asking them for the information,” he added.

Newly confirmed Commissioner Michael Piwowar is also vocal in his opposition to the rule proposal. It “represents what is worst about our current rulemaking agenda,” he said at Wednesday's meeting, adding that he “objects to the Commission even considering it.”

“Proponents of the pay ratio disclosure rule, to their credit, have been transparent about the fact that the objective of the rule has nothing to do with any part of the Commission's core mission,” Piwowar said. “In fact, proponents have acknowledged that the sole objective of the pay ratio disclosure rule is to shame CEOs. But the shame from this rule should not be put upon CEOs.  It should be put upon the five of us who will be voting on this proposal today.”

“Shame on us for putting special interests ahead of investors,” he said. “Shame on us for letting special interests distract us from our core mission.  Shame on us for surrendering our rulemaking agenda to special interests.”

The pay ratio disclosure rule will harm investors, he claimed.  Because many external factors may affect the calculation of the pay ratio, “any investor that uses pay ratio disclosures to compare companies will be at best distracted from material investment information and at worst misled about the investment itself.” Pressure to maintain a low pay ratio could also curtail expansion of business operations into regions with lower labor costs, he suggested.

Caught between a Congressional mandate and its core mission, the SEC was “ forced to choose between incompatible statutory mandates,” Piwoar said.

He urged registrants subject to a pay ratio disclosure rule to “provide realistic estimates of the costs of compliance with the proposed rule, either individually or through their trade associations,” for example how the calculation of a pay ratio would interact with Sarbanes-Oxley-mandated internal control assessments.