September 18, 2013
By The Frankowski Firm, LLC
A HuffingtonPost.com article reports the SEC is proposing a new, and hotly debated, disclosure rule for CEOs. The rule, which is actually required under the Dodd-Frank Act, will force corporations to disclose the ratio of pay between the CEO and an average worker.
The article points out that in the past, companies have complained about the potential hardship of calculating the pay of a median worker; however, many firms already publish their labor costs in various SEC filings. The HuffingtonPost.com article shed further light on the complaints of companies against the new rule, stating that exclusions of part-time and foreign workers were sought to potentially reduce the gap in pay between the CEO and the median worker.
The SEC, in their new rule, proposed statistically sampling a company’s total work force to determine the median worker pay and also rejected the suggestion limit to determination of the median worker pay to only using full time domestic workers, per the article.
This proposed rule is yet another narrowly passed rule, approved with a 3-2 vote. A final rule has yet to be put into place. The article illuminated one data set regarding CEO pay- the Institute for Policy Studies found in 2012 that CEO pay to average worker pay was 354 to 1. The article also pointed out, not surprisingly, that many corporate executives and companies are against this disclosure rule.
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