Few elements of the Dodd-Frank Act create as much dread, say compliance officers, as the requirement that companies calculate and disclose the ratio of CEO compensation to median employee pay. The Securities and Exchange Commission has yet to implement the provision, and companies still hope legislators will kill it.
Opponents of the measure say the number-crunching necessary to figure out that ratio would require companies to collect massive amounts of data and create a compliance nightmare. The details, they say, are endless: Would you count part-time employees? How about someone who quit one month into the year? What about foreign exchange rates? What if someone is fibbing on his or her time sheet?
Governance enthusiasts, however, say companies are simply afraid of publishing an embarrassing number that could hurt their image. “This figure will undoubtedly stand as one of the best-read numbers in public company statements,” says Bartlett Naylor, financial policy... To get the full story, subscribe now.
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