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SEC rule would highlight CEO compensation ratios

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in Compensation and Benefits,Human Resources

The Securities and Exchange Commission (SEC) voted on Sept. 18 to propose new rules that would require publicly traded companies to report the ratio between the compensation of chief executive officers and the median pay of their employees.

Public companies must already report total CEO compensation; it’s required by the 2010 Dodd-Frank financial reform law. The proposed SEC rule would require two more reports: median employee pay and the ratio between CEO and employee pay.

After a 60-day comment period, the SEC will vote to accept or reject the rule, which was written into (but not implemented by) Dodd-Frank.

Current estimates peg the average CEO-to-employee-pay ratio at somewhere between 230:1 and 380:1. In 1965, the ratio was 20:1, according to the Economic Policy Institute.

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