CEOs raking in massive pay packages will soon have to disclose just how much more they make than their employees.
Under a new Securities and Exchange Commission rule approved Aug. 5, starting in 2017, most publicly-traded companies will be required to report the disparity between their CEO’s pay and that of their median worker.
In some cases, that ratio can reach more than 300 to 1, according to a 2014 study by the Economic Policy Institute.
Fifty years ago, the gap was just 20 to 1, a reflection of the massive wage growth among corporate executives while workers’ wages have remained largely stagnant.
The rule, mandated by the 2010 Dodd-Frank financial reforms, took years to implement, in part, because corporate leaders claimed it was burdensome and merely an attempt to shame companies into paying their CEOs less.
New Jersey Sen. Robert Menendez, who authored the provision requiring the disclosure, called the SEC’s action “an important step towards fairness and transparency,” and heralded the move as “restoring sanity to runaway executive pay.”
“We have middle class Americans who have gone years without seeing a pay raise while CEO pay is soaring,” said Menendez.
An EPI study released earlier this year showed average CEO pay rose nearly 1000 percent since 1978, compared with just 10.9 percent for workers.
According to the AFL-CIO, the highest paid corporate executive in 2014 was David Zaslav of Discovery Communications, whose $156 million compensation package paid him nearly 4,500 times the average salary for American workers.
Photo used under a Creative Commons license from Flickr user walkadog