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08/22/2013

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Just read that the SEC is going to require companies to provide the ratio of CEO pay to median pay of a selected group of employees.

What do your sources say about this?

Hi Jacque,

Great question. The SEC has indeed said they hope to have the CEO:Staff pay ratio rules in place in 2 months. I wrote an article about this almost exactly 3 years ago. (http://www.compensationcafe.com/2010/08/the-top-3-provisions-of-doddfrankat-least-for-the-moment.html)

I do think the rule will make into reality before the end of this year. I also think that it will be unfortunate when that happens. The Pay ratios between to companies will ever make sense. The number will be used almost completely for media hype and political punditry.

Agree with you. Different industries, company size, start-up vs established, etc.
People will make all kinds of assumptions and it will create a lot of confusion.

The article said there is brou-ha-ha about companies not having to count employees overseas because that pulls down the average salary and skews the ratio more than it should be.

I can't help but compare this to the attempt by SHRM to create metrics to be put in company financials. The same scenario ---- people making all kinds of wild assumptions.

I think the intent is worthwhile but the devil's in the details!

Agree Dan. Too many factors involved --- size of company, start-up vs established, industry. People will make assumptions.
Not good. The devil's in the details.

Reminds me of SHRM's attempt to make certain metrics required on company financial statements. With no education --- imagination runs wild. And people decide whether to invest in a company based on this "stuff".

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