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I thought the ratio determination was pretty much a legal thing, dictated by the SEC? How much leeway do the companies have? I thought it appeared in the financial statements/filings. Do employees even care and have to know? Do they read these kind of documents?

Yep, it is dictated by the SEC to be disclosed in the, "annual report on Form 10-K, registration statement under the Securities Act and Exchange Act, proxy and information statement." Nonetheless the Pay Ratio is going to be public information that the Media is bound to make a big issue. Curious employees will easily unearth the information and make it a topic of conversation without actually understanding it -- or depending on the company, the media might publish the ratios making the information immediately accessible to employees.

Alternately, employers can face what is going to become an issue, and do their best to make it an opportunity to support their CEO, preempt employee misgivings and strengthen their culture. The article offers suggestions for those who are considering the issues and options.

Harold, thought you'd be interested in this. Another voice on the subject from CFO.com:


Thanks, Margaret, for the article. Sounds a bit like people are trying to make the news, rather than report it. It will be interesting to see how big a deal this topic is, when the reporting begins in 2018.

Headlines will criticize greedy executives and agitate for greater income equity. Predict that nothing will be said about companies with "good" ratios, whatever those are. Unions will trumpet "outrageous" excessive ratios as often and as loudly as it profits them. Wonder if they will publicize THEIR ratios?

The entire regulation is a pure propaganda victory for predatory special interests who don't approve of what corporate shareholders decide to do with their own money ... or have I missed some well-hidden practical public welfare benefit?

No Jim, you haven't.

The SEC itself said that it was only promulgating the regulations because congress told it to, and that it was unclear what these regulations were supposed to do, or what market failure they were addressing.

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