October 4, 2013
In theory, a new proposal from the Securities and Exchange Commission would require CEOs to disclose not only how much they make, but how that sum compares to the average worker. Let's make this work -- REALLY work -- in practice as well
A total lack of clear methodology in how exactly companies are meant to calculate this figure gives corporations a blank check to come up with any figure they want. What turned a measure meant to increase transparency and accountability into yet one more way for corporations to obscure truth and cast illusions? A deep and abiding concern on the part of the SEC that following this rule not be too expensive for multibillion dollar corporations.
SEC folks, please do more for the rest of us, less for the corporations: increase financial transparency and highlight the growth of an already hideous inequality between well-heeled executives and the average worker, without whom no wealth would be generated at all.
This is a textbook example of how regulatory agencies too often take on the perspective of those whom theyre supposed to be regulating, as opposed to being an advocate for the public.
Allowing registrants to select a methodology for identifying the median, including identifying the median employee based on any consistently applied compensation measure and allowing the use of reasonable estimates, rather than prescribing a methodology or set of methodologies, could permit a registrant to alter the reported ratio to achieve a particular objective with the ratio disclosure, thereby potentially reducing the usefulness of the information.
YOU should define a consisten methodology. Stop worrying about whether it is expensive for multibillion dollar corporations. Their interests are not the point of this data collection and reporting.