CNBC reports that the US Securities and Exchange Commission (SEC) is preparing to begin enforcement of a law passed by the US Congress three years ago, requiring public companies "to calculate how much all their employees get paid, figure out the median, then compare it to the CEO's pay package.
Some believe that such information will train a needed spotlight on pay disparity in publicly owned corporations, while critics say that it is useless information because there is no real metric for what is appropriate.
Some believe that such information will train a needed spotlight on pay disparity in publicly owned corporations, while critics say that it is useless information because there is no real metric for what is appropriate.
- KC's View:
-
It is a fair criticism of the new rules that some comparisons will be irrelevant - for example, it won't make a lot of sense to compare the differences in pay between companies like Walmart and Citicorp. But it will make a lot of sense to compare the disparities among companies like Walmart, Target and Costco.
In general, I think this sort of comparison is a good thing, especially at a time when pay disparity is becoming a much larger factor in how some investors make decisions. It is an economic issue and, for some of us, an ethical issue.
