On December 7, Portland, Oregon, passed a law that will impose a surcharge on the local business taxes paid by corporations that operate in the city when the CEO’s compensation is 100 times or more the median earnings of the company’s employees. To monitor this ratio, the Portland law will make use of data that, beginning in 2017, U.S. public corporations must file with the U.S. Securities and Exchange Commission (SEC) under the Pay Ratio Disclosure Rule. The SEC’s new disclosure requirement implements a section of the Dodd-Frank Act of 2010 that seeks to expose extreme pay gaps within corporations and to permit cross-company comparisons of CEO-worker pay inequality.
If the SEC Measured CEO Pay Packages Properly, They Would Look Even More Outrageous
Portland’s new compensation rule is keying off the wrong measure.
December 22, 2016