Required by the 2010 Dodd-Frank financial law, the CEO pay-ratio rule emerged as a major flash point because it tied corporate disclosure policy to divisive political debates about income inequality and executive pay. It wasn’t until the Securities and Exchange Commission last Wednesday, August 5, 2015, voted 3-2 to approve the measure, with the panel’s two Republican members opposing it, that the rule finally has come to be. Now companies must start disclosing the pay gap between their top boss and rank-and-file employees under one of the most significant post-crisis rules addressing executive pay, launching a period of uncertainty for companies over whether the disclosure will rile up shareholders, employees and the broader public.
…show more content…
The SEC rule means rank-and-file workers will be able to see how they stack up against the median employee at their firm and at other firms. This may raise all sorts of questions as to whether a person believes they’re paid fairly both internally…and [compared] to competitors the boss and, possibly, why they are less richly rewarded than their peers or competitors.
Chief executive officers (CEOs) get paid lots of money for being the top employees in the company. Why do they get paid so much? Its has been said that they, like athletes and actors, provide a level of talent that is required to produce the desired product - in this case, a strongly performing company. The skills and responsibilities that come with the job of CEO are extreme and the number of people who can fill these roles is limited. That is why the market has determined that people with these skills are worth a lot of money to their companies. Only about 20 percent of a CEO's pay is base salary; the rest is made up of incentives based on the company's performance. The rationale is that if the company is performing well and the shareholders are making money, then the CEO should share in that
The SEC rule means rank-and-file workers will be able to see how they stack up against the median employee at their firm and at other firms. This may raise all sorts of questions as to whether a person believes they’re paid fairly both internally…and [compared] to competitors the boss and, possibly, why they are less richly rewarded than their peers or competitors.
Chief executive officers (CEOs) get paid lots of money for being the top employees in the company. Why do they get paid so much? Its has been said that they, like athletes and actors, provide a level of talent that is required to produce the desired product - in this case, a strongly performing company. The skills and responsibilities that come with the job of CEO are extreme and the number of people who can fill these roles is limited. That is why the market has determined that people with these skills are worth a lot of money to their companies. Only about 20 percent of a CEO's pay is base salary; the rest is made up of incentives based on the company's performance. The rationale is that if the company is performing well and the shareholders are making money, then the CEO should share in that