There is still no sign of a final pay ratio rule from the Securities and Exchange Commission, but there is new analysis from its Division of Economic and Risk Analysis the Commission available for public comment.
The DERA analysis considers the potential effects of excluding different percentages of employees from the pay ratio calculation. It is posted on the SEC’s website as part of the comment file for rules proposed by the Commission in September 2013 that would require the disclosure of the median of the annual total compensation of all employees of the issuer; the annual total compensation of the chief executive officer of the issuer; and the ratio of the median of the annual total compensation of all employees of the issuer to the annual total compensation of the chief executive officer of the issuer.
Excluding some employees from the determination of median employee compensation, which some commenters suggested, can affect the calculation of that median and thus change the ratio of the annual total compensation of the principal executive officer to the median of the annual total compensation of employees, DERA wrote.
The new research details how different scenarios may apply to different firms and categories of excluded employees, the affect of currency changes, and the differential in skills between full-time and part-time employees domestically and abroad.
For example, based on U.S. Bureau of Economic Analysis data, employees of U.S. multinational firms outside the U.S. on average receive lower compensation than employees located inside the U.S. However, for some firms with employees outside the U.S. in highly skilled occupations or firms with employees in jurisdictions with high labor costs in U.S. dollar terms, some employees outside the U.S. may receive higher compensation than employees located inside the U.S.
Some research also finds lower average hourly pay for part-time employees than for full-time employees. In addition, part-time and seasonal employees are likely to work fewer hours in a typical year than full-time employees.
The various scenarios that could affect the pay-ratio calculation are detailed by DERA. Comments may be submitted to the comment file (File No. S7-07-13) for the proposed rules and should be received by July 6.
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