Thursday, April 26, 2012
What is the ratio between the pay of the lowest and highest paid employees in a company? No one really knows because pay scales and benefits packages vary from country to country and region to region. Yet, unions are pushing for a ratio to be included in annual proxy statements. Compensation experts say that it will be difficult to arrive at any result that is accurate and meaningful. No matter. It is the perception that counts. The unions want a ratio that they can use to embarrass CEOs annually. they just might get it. Should one feel sorry for CEOs? Not really. By any calculation, they are paid well. But it is questionable whether one should be pilloried over a number that is meaningless. Should the regulation pass, it will increase pressure on the executive suite and on boards. Maybe that is good.