A controversial component of the 2010 Dodd-Frank legislation, which increased regulation of the financial sector and publicly-traded companies, just received its final form by the Securities and Exchange Commission. Corporations will have to disclose the pay ratio between CEOs and a company’s median-paid employee — the middle point in pay, with the number of people making more being the same as the number of people making less.

Although not applicably the privately-held companies, which make up the majority in the country, this rule would force big companies to show just how much more top executives make than a typical representative of rank-and-file employees. There have been various claims from studies, like the AFL-CIO saying that the average CEO made 331 times more than the average employee and 774 times more than minimum wage workers.

That number may not hold up because it was calculated from only five companies known for high executive compensation and low wages. But the SEC rule would force many companies to shake loose and admit how big income gaps, and income inequality, are among their employees.

To call this a contentious issue is putting it mildly. In a statement, SEC Chair Mary Jo White wrote that the agency had “received more than 287,400 comment letters, including over 1,500 unique letters, with some asserting the importance of the rule to shareholders as they consider the issue of appropriate CEO compensation and investment decisions, and others asserting that the rule has no benefits and will needlessly cause issuers to incur significant costs.”

However, the big worry is probably how bad many companies will look when shareholders and the general public can compare how much a CEO makes compared to a regular employee. Some studies have suggested thathighest-paid CEOs are often the worst performing. But that would pale next to a direct comparison between a highly-paid CEO and a struggling middle-of-the-pack worker. Senator and presidential candidate Bernie Sanders (I-Vt.) said in a statement, “The decision to require companies to disclose how much more CEOs are paid than workers is an important step in the fight against income inequality.”

see more at http://jobtrends.com.ng/us-about-to-pass-a-legislation-that-ensures-income-equality-between-ceos-and-employees/

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