SEC: Companies Must Reveal Pay Gap of CEOs, Workers

SEC puts new rule into motion
By John Johnson,  Newser Staff
Posted Aug 5, 2015 1:00 PM CDT
SEC: Companies Must Reveal Pay Gap of CEOs, Workers

Those worried about income inequality will soon have some tangible new figures at their disposal: The SEC today ruled that public companies must start revealing the pay gap between the CEO and a typical worker, reports the Los Angeles Times. Specifically, companies have to disclose median employee compensation—the figure at which half their workers earn more and half earn less—and compare it to the CEO's salary starting in 2017, reports Bloomberg. The ratio must be updated every three years.

The rule, mandated by the 2010 Dodd-Frank law but never put in place, "should provide a valuable piece of information to investors" and help observers gauge how companies manage "human capital," says SEC Commissioner Kara Stein, per the Wall Street Journal. She and two fellow Democrats voted in favor, while the two Republicans on the commission voted against it. The rule is "pure applesauce," said GOP commissioner Daniel Gallagher, echoing Antonin Scalia's line about ObamaCare. (Read more CEO compensation stories.)

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