This new rule could reveal the huge gap between CEO pay and worker pay

The Walton family heartily approves of this message.

 

It's the same definition used today for SEC filings. CEO pay, as well as CFO and a limited number of other highly paid execs and non-execs, is already required to be disclosed in SEC filings of publicly traded companies. Dodd-Frank section 953(b) added the requirement to calculate a ratio comparing only the CFO salary to median of all other employees.

SEC rules require exec comp to be reported and broken out by: salary; bonus; stock awards; non-stock incentive awards; change in pension/deferred income; all other.

 

The current Gannett CEO, at least, tone-deaf music videos aside, has a bit of a track record of success, and, at first, seemed a little more self-aware of the company's image to its employees.

Her predecessor, on the other hand, nearly ran the company into the ground. Which is why I thought it was laughable when people on here would argue that he still deserved his millions. Really? He took the company stock from $90 to $3 a share. They were afraid he would bolt? For where? With that track record, let him leave.

 

Yeah. LeBron James doesn't walk around feeling embarrassed that he makes 500 times more than the equipment guy. He's embarrassed that he makes less than Joe Johnson and Carmelo Anthony.

 

What's the going athlete-to-hanger on pay ratio?

 

With a brain like that, you might even be able to think of CEOs who didn't add anything to the company yet still took home millions.

 

Solve the principal-agent problem and you'll be the one to make millions.

 

I'm not being snarky here, but if you're so smart as to have figured out that play, why do you think all those stockholders (or potential stockholders) haven't figured that out? Especially when it's their money that's actually in play.

Or, just maybe, that's not really how it works?

 

You don't think som companies make short-term decisions based on meeting quarterly numbers without regard to what's best in the company for the long run? OK.

Quote from a pretty smart executive: When things are going well, a bunch of monkeys could run the company. When they aren't, that's when you need someone who knows what they are doing.

 

Oh sure some companies do, in some circumstances. But do you really think that's the general rule? That capital markets are so inefficient that that sort of play isn't penalized in the vast majority of cases? I'll tell you that the evidence is stacked heavily against your position.

 

If you think about it, that could lead to some perverse incentives re: your workforce. Stipulating that having a large ratio will be costly somehow (and I'm not sure it will, but just for the sake of discussion here), you're incentivizing firms to "hollow out" their lower-paid ranks. If I'm a CEO considering expansion, and said expansion is going to involve employing a lot more lower-paid workers, I might pass on that because it'd lower my median compensation. Indeed, I might be inclined to outsource even more of the lower-comp work, as that would increase my firm's median compensation (and therefore reduce my ratio).

 

Most of my direct experience is in newspaper corporations, so ....

Just because it doesn't result in driving the stock market up, doesn't mean that some corporations don't try to stem the bleeding rather than focus on what's best for the future.