October 4, 2013
I have recently learned of the new rule for computing the median pay for a corporation and the subsequent ratio with the CEO of the same corporation. This rule as written will permit each company to create the ratio they wish to achieve and then fabricate the median pay to achieve the ratio and still comply with the rule. This is not only counter to the specific law but is counter to the concept of being a 'nation ruled by laws'.
Please update the new rule to more honestly reflect the law. Some specific approaches to include are as follows:
1. include all compensation from the company to the employee when determining the median pay and the CEO pay. This includes all benefits (health, disability, insurance, etc) as well as stock options, bonuses and other forms of compensation.
2. include all employees who receive compensation of any form from the company in determining the median pay.
3. part-time workers should be included and their pay projected to being full-time workers should be used as needed for the median pay determination.
4. make the rule consistent for all companies so that a comparison may be made across companies. This will aid investors when deciding which companies to invest.
5. if the CEO pay or the median pay determination s considered onerous for a company, then it points to a problem within the finance department within the company and this would also be useful for an investor to know when evaluating the company.
Thank you and I look forward to reviewing a revised version of the rule.