September 25, 2013
The proposal may increase awareness of the gap in pay however, the proposal does not necessarily restrict increasing gaps.
Frequently, CEO compensation packages include language to ensure highly competitive compensation relative to the CEOs of competitors (e.g. compensation package will be renewed at a rate to ensure the CEO will be compensated in the top 25% of his/her peer group).
I think a better use of legislation would be to restrict the use of competition based compensation calcuations. I would encourage CEO compensation to be calculated purely on the performance of the company's performance, rather than consider the pay of the competitors' CEOs.
This would stop the "arms race" of CEO packages and allow the compensation gap room to narrow.