SEC: Companies must show CEO-to-worker pay ratio

[Captain Adverse]

Federal regulators have approved a long-delayed rule requiring companies to reveal the pay gap between CEOs and their employees.

The Securities and Exchange Commission voted Wednesday to order most public companies to disclose the ratio between their chief executives' annual compensation and median, or midpoint, employee pay.

SEC requires companies to reveal CEO-vs-worker pay gap - Yahoo News

Well this should prove interesting. We'll be able to see how much corporations are saving by cutting employee wages....compared to what their top officers are getting in salary and benefits.

Probably won't make much difference in the scheme of things...and by that I mean the scheme where the top 1% keep getting richer, while soothing the rest of us with the belief "anyone can become a billionaire" if you just work hard enough.

 

[Redress]

Well this should prove interesting. We'll be able to see how much corporations are saving by cutting employee wages....compared to what their top officers are getting in salary and benefits.

Probably won't make much difference in the scheme of things...and by that I mean the scheme where the top 1% keep getting richer, while soothing the rest of us with the belief "anyone can become a billionaire" if you just work hard enough.

While I see the humor, I have a problem with this. I have no problem with government regulations of business, but they should serve a purpose. This does nothing except create enmity. This is to my mind a bad regulation.

 

[Captain Adverse]

While I see the humor, I have a problem with this. I have no problem with government regulations of business, but they should serve a purpose. This does nothing except create enmity. This is to my mind a bad regulation.

I think that's the point. Businesses, especially corporations, have been taking all sorts of measures, from shifting employment overseas where they pay pennies per hour for labor and resources, to hiring short-term contract labor (temporary workers) at low wages and no benefits in order to bulk up profits to please investors. Yet senior executive wages and benefits continue to increase.

Arguments have been made in the past based on estimated income, usually garnered form income tax records to make these comparisons. Now we can have quarterly reports made public for use in comparing employee and management costs. You bet it's going to piss people off, both wages earners and investors.

What good it will do remains to be seen.

 

[Renae]

Well this should prove interesting. We'll be able to see how much corporations are saving by cutting employee wages....compared to what their top officers are getting in salary and benefits.

Probably won't make much difference in the scheme of things...and by that I mean the scheme where the top 1% keep getting richer, while soothing the rest of us with the belief "anyone can become a billionaire" if you just work hard enough.

The SEC is out of it's ****ing mind.

 

[PirateMk1]

I think that's the point. Businesses, especially corporations, have been taking all sorts of measures, from shifting employment overseas where they pay pennies per hour for labor and resources, to hiring short-term contract labor (temporary workers) at low wages and no benefits in order to bulk up profits to please investors. Yet senior executive wages and benefits continue to increase.

Arguments have been made in the past based on estimated income, usually garnered form income tax records to make these comparisons. Now we can have quarterly reports made public for use in comparing employee and management costs. You bet it's going to piss people off, both wages earners and investors.

What good it will do remains to be seen.

CEO's CFO's and other officers of publically traded companies compensation packages, have been for some time public information. I don't see what this new rule is supposed to accomplish. This information is already known.

SEC.gov | Executive Compensation

In the annual proxy statement, a company must disclose information concerning the amount and type of compensation paid to its chief executive officer, chief financial officer and the three other most highly compensated executive officers. A company also must disclose the criteria used in reaching executive compensation decisions and the relationship between the company's executive compensation practices and corporate performance.

 

[PirateMk1]

I think that's the point. Businesses, especially corporations, have been taking all sorts of measures, from shifting employment overseas where they pay pennies per hour for labor and resources, to hiring short-term contract labor (temporary workers) at low wages and no benefits in order to bulk up profits to please investors. Yet senior executive wages and benefits continue to increase.

Arguments have been made in the past based on estimated income, usually garnered form income tax records to make these comparisons. Now we can have quarterly reports made public for use in comparing employee and management costs. You bet it's going to piss people off, both wages earners and investors.

What good it will do remains to be seen.

All of that is a result of the cooperate officers fiduciary duty to their shareholders as result of the current tax and regulatory conditions. If said conditions were changed then the resulting choices made would change accordingly. As for CEO pay. Good CEO's are like sports players the best get compensated very well and pay for themselves despite their expense. CEO's that can consistently perform are difficult to come by much like finding a good quarterback in the NFL. The Tom Brady's and Peyton Manning's of the business world command top dollar.

 

[Henrin]

So basically the government is creating busy work because some people in government don't like how much CEO's are paid. We need to throw politicians in jail for this kind of ****.

 

[Henrin]

I think that's the point. Businesses, especially corporations, have been taking all sorts of measures, from shifting employment overseas where they pay pennies per hour for labor and resources, to hiring short-term contract labor (temporary workers) at low wages and no benefits in order to bulk up profits to please investors. Yet senior executive wages and benefits continue to increase.

Arguments have been made in the past based on estimated income, usually garnered form income tax records to make these comparisons. Now we can have quarterly reports made public for use in comparing employee and management costs. You bet it's going to piss people off, both wages earners and investors.

What good it will do remains to be seen.

Sigh. It's none of your damn business what the CEO is paid. If you want to impose on business just to piss people off then frankly you deserve a jail cell.

 

[joG]

Well this should prove interesting. We'll be able to see how much corporations are saving by cutting employee wages....compared to what their top officers are getting in salary and benefits.

Probably won't make much difference in the scheme of things...and by that I mean the scheme where the top 1% keep getting richer, while soothing the rest of us with the belief "anyone can become a billionaire" if you just work hard enough.

Which is less spectacular than the headline would indicate. We have long been able to find out, what earnings the top managers get and we know what a cleaning person earns.

But it is not so much the pay gap that is a problem as th wealth gap in any event.

 

[rabbitcaebannog]

Well this should prove interesting. We'll be able to see how much corporations are saving by cutting employee wages....compared to what their top officers are getting in salary and benefits.

Probably won't make much difference in the scheme of things...and by that I mean the scheme where the top 1% keep getting richer, while soothing the rest of us with the belief "anyone can become a billionaire" if you just work hard enough.

Good, because the larger the executive payout, the less the corporation pays in taxes, and average taxpayers wind up footing. This is a big culprit causing our inequality problem and harming our social safety nets by lowering revenue.

 

[ludin]

I think that's the point. Businesses, especially corporations, have been taking all sorts of measures, from shifting employment overseas where they pay pennies per hour for labor and resources, to hiring short-term contract labor (temporary workers) at low wages and no benefits in order to bulk up profits to please investors. Yet senior executive wages and benefits continue to increase.

Arguments have been made in the past based on estimated income, usually garnered form income tax records to make these comparisons. Now we can have quarterly reports made public for use in comparing employee and management costs. You bet it's going to piss people off, both wages earners and investors.

What good it will do remains to be seen.

what does it matter? a company can pay people whatever it wants to.
it is no one's business what is in the ceo's contract that is a private matter between the ceo and the company.
companies have non-disclosure agreements on salaries for a reason.

 

[ludin]

Good, because the larger the executive payout, the less the corporation pays in taxes, and average taxpayers wind up footing. This is a big culprit causing our inequality problem and harming our social safety nets by lowering revenue.

what a load of crock.

taxpayers don't foot the bill for a company keeping more of the money it's earned.

 

[rabbitcaebannog]

what a load of crock.

taxpayers don't foot the bill for a company keeping more of the money it's earned.

What's lost in revenue will be made up elsewhere. That means two things....average people paying higher taxes to try and support revenue that has been cut and/or cutting public programs supported via taxes.

 

[ludin]

CEO's CFO's and other officers of publically traded companies compensation packages, have been for some time public information. I don't see what this new rule is supposed to accomplish. This information is already known.

SEC.gov | Executive Compensation

the difference is that it is posted on the companies website and you would have to go look it up. this makes it available to the public period.
I am sure next there will be penalties and taxes involved for companies who's executive pay is so much of a percentage higher than worker pay.

you wait that is coming next, and according to the SCOCTUS as long as it is a tax congress can force it on you to do.

 

[ludin]

What's lost in revenue will be made up elsewhere. That means two things....average people paying higher taxes to try and support revenue that has been cut and/or cutting public programs supported via taxes.

there is no loss of revenue. you don't know what you are talking about.
a company keeping more of what it earned does not cost you anything.

 

[OrphanSlug]

This has ties all the way back to the Dodd–Frank Wall Street Reform and Consumer Protection Act, specifically section 951. That section has reference to older regulation where most publicly traded companies already disclose compensation of top executives in proxy filings submitted to the SEC before annual stockholder meetings. This new rule was designed to help with complicated disclosures by simplifying the whole thing into a single standard by including everyone else's median incomes.

That said I tend to agree with others that this rule itself does not do all that much but cause an emotional response to the ratio.

From an "investment standpoint" the ratio does not necessarily equate to a positive or negative when considering the more usable investment sentiment from things like P/E Ratios, or Dividend Yield, or performance trend over a given time, revenue to profit reporting, cash reports, etc. It could in the right context, but probably not in most cases.

The SEC made a mistake on this one.

 

[ludin]

What's lost in revenue will be made up elsewhere. That means two things....average people paying higher taxes to try and support revenue that has been cut and/or cutting public programs supported via taxes.

wrong thinking is wrong thinking no matter how many times you want to repeat yourself.
please tell me how much extra it cost you on your tax bill last year because a ceo made 1m dollars.

I would please like to know how much extra you paid.
please support your claim.

better yet please show me where your taxes went up because a company took a 40% deduction of their employee's pay.

 

[Blue_State]

Now if we could only compare that to taxes paid...and I think we have a winner.

Honestly, no. This is an exercise in stupidity by the SEC. They have as much right to do this as they would to ask the level of inflation in footballs for all Pats games.

 

[cpwill]

What's lost in revenue will be made up elsewhere. That means two things....average people paying higher taxes to try and support revenue that has been cut and/or cutting public programs supported via taxes.

That's an interesting theory. I had no idea that the US had gone to a zero-based budget, and ceased borrowing money.

 

[ttwtt78640]

Good, because the larger the executive payout, the less the corporation pays in taxes, and average taxpayers wind up footing. This is a big culprit causing our inequality problem and harming our social safety nets by lowering revenue.

Hmm... why do you feel that the higher ratio of executive pay to total (or median) payroll would reduce the total tax bill? The corporate tax bill goes down for any business expense, like total payroll costs. The part which you seem to ignore is that employee pay is also taxable income. Who pays more (and at a higher rate) tax a CEO making $1 million/year or a cashier making $20K/year?

Arbitrarily paying folks more causes the prices of the goods/services that they produce/provide to rise. Rising prices for good/services hurt the lower income worker much more than the higher income worker since the lower income worker must spend a higher percentage of their income simply to survive. You seem to desire trading a progressive income tax for a regressive increase in consumer prices to help pay for (or reduce) "welfare" costs.

 

[Slartibartfast]

I don't see how this regulation will be useful. CEO pay isn't going to change as a result. Buying practices among the vast majority of consumers won't change as a result. I just don't see how this would change anything.

This is purely social engineering, but not even good social engineering as it yields no benefits.

 

[jonny5]

Well this should prove interesting. We'll be able to see how much corporations are saving by cutting employee wages....compared to what their top officers are getting in salary and benefits.

Probably won't make much difference in the scheme of things...and by that I mean the scheme where the top 1% keep getting richer, while soothing the rest of us with the belief "anyone can become a billionaire" if you just work hard enough.

Is the purpose here to create social unrest by exposing confidential information of employees? Shareholders already have the power to get this information if they want. The purpose of the SEC is

protecting investors from dangerous or illegal financial practices or fraud, by requiring full and accurate financial disclosure by companies offering stocks, bonds, mutual funds, and other securities to the public.

How is this serving that goal?

 

[Thoreau72]

I think that's the point. Businesses, especially corporations, have been taking all sorts of measures, from shifting employment overseas where they pay pennies per hour for labor and resources, to hiring short-term contract labor (temporary workers) at low wages and no benefits in order to bulk up profits to please investors. Yet senior executive wages and benefits continue to increase.

Arguments have been made in the past based on estimated income, usually garnered form income tax records to make these comparisons. Now we can have quarterly reports made public for use in comparing employee and management costs. You bet it's going to piss people off, both wages earners and investors.

What good it will do remains to be seen.

In her book 'Shock Doctrine', Naomi Klein talks about this subject, and offered some older data. In 1980, the average CEO made 43 times what the average worker made here in the US. By 2005 that number was about 10 times greater, at 411 times the wages of the average worker.

Lord only knows what that ratio is today.

 

[jonny5]

In her book 'Shock Doctrine', Naomi Klein talks about this subject, and offered some older data. In 1980, the average CEO made 43 times what the average worker made here in the US. By 2005 that number was about 10 times greater, at 411 times the wages of the average worker.

Lord only knows what that ratio is today.

But so what? Why should a business be forced by the govt to expose to the public its wages?

 

[Ockham]

Sigh. It's none of your damn business what the CEO is paid. If you want to impose on business just to piss people off then frankly you deserve a jail cell.

I disagree. Many employees are also shareholders and as a shareholder understanding what a CEO makes is important when voting for board members - and who those board members endorse for CEO or if they are dissatisfied with the CEO's performance, how to vote to replace the CEO.

Well this should prove interesting. We'll be able to see how much corporations are saving by cutting employee wages....compared to what their top officers are getting in salary and benefits.

Probably won't make much difference in the scheme of things...and by that I mean the scheme where the top 1% keep getting richer, while soothing the rest of us with the belief "anyone can become a billionaire" if you just work hard enough.

Looking at it optimistically this may be a way for corporations to self regulate the CEO market caps. If the business world finally comes to a realization say, that that market salary for CEO's is too high, self regulation on compensation may take place and corporations could take steps to curb excessive compensation. For example, McAdams in Verizon in 2013 made $15.6M in compensation, most of which came from a stock award and stock grant worth $4.2M. He also received $780K in "other compensation" and $150K for home security and $120K for personal use of aircraft.

Vested shares in stock options gain another $34M, $20.8M of which came from exercising previously held stock options. Let's just say that's all additive - and it's $15.7M+$9.4M+$780K+$120K+34M = $59.7M

If the median pay of employees is let's just make up a number, $250K, that means the CEO is making 240x the median pay of the employees. To be more fair let's just use the $15.7M in compensation without the extras - that would mean it's 63x the median employee's pay. If the market can justify a 63x median pay, or a fully compensated 240x median pay as being worth the dollars - then okay. I can tell you the employees won't see the value though.

I don't see how this regulation will be useful. CEO pay isn't going to change as a result. Buying practices among the vast majority of consumers won't change as a result. I just don't see how this would change anything.

This is purely social engineering, but not even good social engineering as it yields no benefits.

Possibly - but it also provides an insight into gross overpay where it exists - so the market and a companies board of directors can make adjustments if necessary. It may not happen and the gross overpayment may continue but it will certainly provide more information to investors and to stock holders - which is a good thing.