Will the SEC Pay-Ratio Rules Help Shareholders?
A closer look at how the controversial new metric affects institutional investors.
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Earlier this month, the Securities and Exchange Commission (SEC) rolled out a new rule mandating that U.S. companies reveal the pay gap between chief executives and median workers. The regulation has elicited a storm of opinion among companies, politicians, and labor unions over its benefits and disadvantages.
The SEC rule comes at a time of increasing shareholder scrutiny over corporate governance, and public concern over the inequality gap between the salaries of company leaders and the pay of those lower down. Last year, top CEOs in the U.S. made over 300 times more than a typical worker, compared to 122 times more in 1995 and 20 times in 1965, according to a 2014 report from the Economic Policy Institute.