Will New Pay Ratio Disclosure Lead to “Public Infamy?” – CEO Pay Updates: 2017 Proxy Season

Rosanna Landis Weaver writes about pay ratio disclosures for As You Sow, quoting Alexander Hamilton: “Public infamy must restrain what the laws cannot.”

CEO pay has continued to rise sharply in the years since Mackey said a pay cap was not an impediment to hiring. Perhaps greed and executive entitlement have increased markedly since 2009. Still, it is worth recalling that an arbitrary limit of 17:1 was not a problem less than a decade ago as you see ratios of over 170:1 in 2018.  I expect to see an astonishing range of data come out on pay ratios this year. The SEC has given companies broad discretion on how to calculate the data, and broadened it even more with additional interpretive guidance in September. Because the data will be variable it will make it more difficult to compare company to company, within industry, or by size. That may backfire on those that hoped to add complexity to cloud data comparisons. The overall ratio will stand out even more glaringly.<P

Perhaps public infamy – which should be focused on the directors who design the packages, the shareholders that approve them, as well as the executives themselves – may yet restrain what this disclosure will now clearly illustrate. In 2015, SEC Commissioner Gallagher, in his opposition to the rule wrote of “perceived income inequality” in the same tone that others in his party write of “purported climate change.”  In both of these matters, numbers don’t lie.

Source: Will New Pay Ratio Disclosure Lead to “Public Infamy?” – CEO Pay Updates: 2017 Proxy Season

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