Rule would require CEO pay disclosure
WASHINGTON — CEOs make a lot more than the average working Joe or Jane. And in the near future, Americans will find out how big the disparity actually is within publicly traded companies.
Federal regulators, under mandate from a 2010 law that reshaped regulation after the financial crisis, will require companies to reveal the extent of their own pay gaps.
The Securities and Exchange Commission is scheduled to vote today to formally adopt the rule, which will compel public companies to disclose the ratio between their chief executives’ annual compensation and median employee pay.
The issue of executive compensation took on greater urgency in the wake of the 2008 financial crisis. Outsize pay packages — often tied to the company’s stock price — were blamed for encouraging disastrous risk-taking and short-term gain at the expense of long-term performance.
It won’t be known until the SEC acts how soon the new information would start showing up in companies’ financial reports.
The vote at the public meeting is likely to split the five-member SEC along partisan lines, as it did when the rule was proposed in September 2013. The two Republican commissioners, Daniel Gallagher and Michael Piwowar, at the time called it a shaming exercise and political showmanship.
