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SEC adopts rule mandating disclosure CEO-worker pay ratios

Ratio of Average Annual CEO Compensation to Average Worker Compensation, 1965-2010
Ratio of Average Annual CEO Compensation to Average Worker Compensation, 1965-2010
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Today in a 3-2 vote, the Securities and Exchange Commission adopted a rule forcing companies to disclose pay disparities between their CEOs and their lowest paid workers.

The measure was part of the 2010 Dodd-Frank law, but its implementation was long delayed. Speaking today, SEC Commission Chair Mary Jo White explained the delay, "Since it was mandated by Congress, the pay ratio rule has been controversial, spurring a contentious and, at times, heated dialogue.  

The Commission has received more than 287,400 comment letters, including over 1,500 unique letters, with some asserting the importance of the rule to shareholders as they consider the issue of appropriate CEO compensation and investment decisions, and others asserting that the rule has no benefits and will needlessly cause issuers to incur significant costs."

How would a pay disclosure increase costs of companies? What will be the optics once more is learning about CEO to worker pay ratios? How will it impact the national debate about minimum wages?

SEC Proposed Rule on Pay Ratio Disclosure


Sylvia Allegretto, Economist and Co-Chair of UC Berkeley's Center on Wage and Employment Dynamics

J.W. Verret, Professor of Law, George Mason University; Member with The Mercatus Center at George Mason University, conducting market-oriented research; From May of 2013 through April of 2015, Verret served as Chief Economist on the House Financial Services Committee