Companies to be forced to reveal ratio of CEO & worker pay

US companies will be forced to publish how many times more their Chief Executive is paid relative to rank and file employees, if new legislation is passed later this year.

As part of the Dodd-Frank Wall Street Reform of 2010 all publicly traded companies have to disclose the ratio of the CEO’s salary compared to the median salary of all employees at the company, however, this did not always become public knowledge.

Should proposed legislation from the Securities and Exchange Commission be passed then the figures would have to be included in companies’ annual report. The proposed legislation uses the following example of what a company would be required to produce: “If the median of the annual total compensation of all employees of a registrant is $45,790.39 and the annual total compensation of a registrant’s [principal executive officer] PEO is $12,260,000, then the pay ratio disclosed would be ‘1 to 268’ (which could also be expressed narratively as ‘the PEO’s annual total compensation is 268 times that of the median of the annual total compensation of all employees’).”