Mercer: 80% of employers struggling to comply with CEO pay ratio rule

Dive Brief:

  • An update to a 2016 Mercer survey provided to HR Dive in an email shows that 80% of respondents are still trying to comply with the Security Exchange Commissions' (SEC's) CEO pay ratio rule, the difference between a company head's pay and workers' earnings. The rule requires open disclosure of the ratios, as part of the Dodd-Frank financial reform law.
  • The survey also showed that 50% of respondents found a lower than expected pay ratio between CEO's and workers' pay. The ratio was less than 200:1, far lower than the 347:1 estimate for S&P 500 companies.
  • Mercer says that even though most employers are trying to comply, the Republican-led Congress and the Trump administration will likely push for a delay or repeal of the SEC rule.

Dive Insight:

Republican lawmakers vowed to repeal the Dodd-Frank financial reform law long before the November 2016 presidential election. With full backing from the Trump administration, delay — and possibly repeal — could stall the law's implementation in 2018. The Financial Choice Act, approved by a House committee, doesn't explicitly call out Dodd-Frank, but it does likely target it.

Meanwhile, employers should continue with their compliance efforts. Willis Towers Watson offers employers 6 steps for configuring SEC ceo-to-worker pay ratios. 

The broader issue here could be employee perceptions of an employer and its pay scale. Candidates might also be turned off by significant gaps between CEO and worker's salaries. As this issue continues to generate media attention and public discourse, the perception problems that could be generated by such issues cannot be discounted. 

Filed Under: HR Management Legal