The Securities and Exchange Commission on Aug. 5 adopted a final rule that requires public companies to disclose the ratio of chief executive officer compensation to the median compensation employees receive. The rule, mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, is designed to help inform shareholders when voting on how much CEOs should be paid.
Publicly traded companies are already required to report CEO compensation, a relatively simple calculation. But the new rule means adding up all compensation paid to all employees worldwide, both full-time and part-time. Critics say that will burden HR departments without benefiting shareholders.
The rule “has no benefits and requires companies to account for all employees, including overseas workers,” according to a statement by the WorldatWork compensation association. “Now our members will be forced to comply with costly and time-consuming regulations to calculate the pay-ratio for all company employees regardless if they are full-time, part-time or seasonal workers.”