Controversy About CEO Pay Disclosure

The U.S. Securities and Exchange Commission voted to require CEOs to disclose how their pay compares to that of employees in their organization. The requirement is part of the Dodd-Frank Act, passed in 2010 to prevent another financial crisis and to protect consumers. 

SEC Press Release
SEC Press Release

The decision is one strategy for what people consider pay inequity between high- and low-earners in the United States, which has increased dramatically, as reported by BloombergBusiness

"Average CEO pay at the 350 largest U.S. companies by revenue surged 997 percent from 1978 to 2014, while the compensation of non-supervisory employees rose 10.9 percent, according to the Economic Policy Institute, a research group that advocates for workers.

"While CEOs earned about 30 times what the typical employee did in 1978, corporate chiefs' pay had jumped to more than 300 times their employees' compensation as of 2014, the institute said."

Opponents say the ruling creates an expensive process and will serve only to embarrass CEOs. But the decision offers several ways for companies to calculate wages, excludes up to 5% of foreign workers, and requires reporting only every three years.

Discussion Starters: 

  • What's your view of the ruling? Is this the right move, and will it achieve its purpose? 
  • How do you assess the Economic Policy data shown above? What story do the numbers tell, and what may be missing? 
  • How could you display the Economic Policy Institute data visually? What chart type(s) would be most appropriate?