October 1, 2013
Between the implementation of say on pay votes and numerous proxy disclosure enhancements over the last 7 years, I think there is an overabundance of CEO pay data available to the public. Maybe in the early 2000s you couldn't say that, but today we know what CEOs make on a theoretical grant date basis, on a realized basis, their equity holdings, stock sales, retirement balances, potential severance pay, even their annual physicals. If shareholders don't like the structure or amount of pay, they can vote against the pay packages where negative results have already been publicized enough to effect some change in outlier pay practices. Most boards have been responsive to weak say on pay results since its implementation in 2011. If shareholders really think that a company's pay practices are or will be damaging to its valuation, they can also sell their shares and enough downward pressure on the stock price would eventually hurt executives financially. Adding the pay ratio is pretty much only useful for media outlets and left-leaning organizations that probably disparage all "large" pay packages relative to the middle class, let alone the median employee at a particular company. I don't think it will come as a shock or add much knowledge to the world when a company like Walmart discloses a four figure ratio. Forcing this particular disclosure won't change compensation in the competitive market for top executive talent.
Since it seems a foregone conclusion that this will be implemented regardless of reason, please give companies maximum leeway so at the very least the generation of this worthless data point can cost the least amount possible from an administrative standpoint, which in the end will benefit shareholders more than knowing the pay ratio.