September 26, 2013
I have a few thoughts about the pay ratio disclosure requirement.
I support requirement. However, I would like to suggest that a specific methodology be used to calculate the inputs (median wage, CEO pay). This consistent methodology would allow investors to compare companies to one another. Without this consistency, the measure loses a lot (if not all) of it's value to investors. Perhaps, companies could try different methodologies for six months then the SEC could choose an appropriate method as the standard.
I would also like to see the pay ratio for the next 4 or even 10 highest paid employees/contractors in the company. Hopefully, this would discourage companies from having a figurehead CEO with a lower pay ratio.