SEC May Soon Require Reporting of CEO Pay Ratio

The Securities and Exchange Commission (“SEC”) may soon require reporting of a new metric by publicly traded companies.  The potentially required ratio would reflect the multiple of CEO pay over the median worker’s pay and is intended to provide shareholders with insight into executive compensation and employee morale.  Bloomberg reports that such a ratio averaged 204 across S&P 500 companies and has risen 20% since 2009.

Like other SEC proposals, the public would be invited to comment before a final version is approved.  There will no doubt be significant pushback from various groups, some of whom have already questioned the cost/benefit of performing the calculation and the possibility of misleading comparisons across companies.

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