American companies will have to disclose how their chief executive's paycheck compares with that of their average worker under a proposal unveiled on Wednesday by the Securities and Exchange Commission, a key US regulator.
The SEC's pay ratio rule is championed by unions and labour advocates who say the disclosures will help shareholders identify whether a company's compensation model is too generous to bosses. Companies and business organisations vehemently oppose the measure, claiming it is too expensive to compile the data and will not be useful for investors.
The proposal is one of two major outstanding regulations mandated by the 2010 Dodd-Frank Wall Street reform law that the SEC planned to tackle at Wednesday's public meeting.
The SEC was also expected to adopt a reform that will allow it to oversee financial advisers to cities, counties and other municipal entities that sell public debt or manage public money.
The SEC's chief executive pay-ratio proposal comes on the heels of the fifth anniversary of the collapse of investment banking giant Lehman Brothers and the country's financial meltdown.
A new report by the Institute for Policy Studies that analysed data on the highest-paid chief executives over a 20-year period found that those whose firms collapsed or received government bailouts had held 112 of the 500 top pay leader slots.
And yet, even after Wall Street reforms were passed, the report said the pay gap between company chiefs and the average American worker had grown from 195-1 in 1993 to 354-1 in 2012.
U.S. CEOs Make 354 Times As Much As Their Average Worker, The Most Marked Inequality In The World: http://www.huffingtonpost.com/2013/04/15/sp-500-ceos_n_3085601.html
Pay Ratios Around The World: http://www.aflcio.org/Corporate-Watch/CEO-Pay-and-You/CEO-to-Worker-Pay-Gap-in-the-United-States/Pay-Gaps-in-the-World
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