According to Andrew Ackerman and Joann Lublin of the Wall Street Journal, the Securities and Exchange Commission is “poised to complete a rule requiring companies to disclose the pay gap between chief executives and employees”. Under the proposed rule, companies would be forced to disclose median worker pay as compared to their CEO compensation. This rule was a measure included in Dodd-Frank, and could be approved by the SEC as early as next week.
A point of contention appears to be the exclusion of overseas workers. The WSJ expects that the SEC will allow companies to exclude 5% of their international workers’ compensation from the pay-ratio calculation; however, companies are pressing for a larger exclusion. There is also concern among stakeholders that the cost associated with compiling such information will outweigh the benefit of it.
Whether the SEC takes action on this rule next week or not, it is expected to implement a pay-ratio rule in the not-so-distant future. Thus, companies should continue to provide their comments to the SEC now before the rule passes, and prepare for its eventual impact.