- Employees are seeing how much their company’s CEO earns compared to their own wages for the first time, The Wall Street Journal reports. The wage disclosures are mandated by the 2010 Dodd-Frank Act, which requires publicly held companies to file pay disclosures with the U.S. Security and Exchange Commission. The purpose is to help shareholders comprehend and challenge CEOs’ pay in relation to employees’ earnings, the Journal notes. Employees also are able to see how their ratios stack up against industry peers.
- Recently released CEO-employee pay ratios include Humana Inc.'s, whose CEO’s $19.8 million a year salary is 344 times its median employee wage; Whirlpool Corp.'s CEO makes $7.08 million a year, 356 times more than employees; and the head of Marathon Petroleum Corp. is paid $19.7 million-a-year salary, 935 times workers’ salaries.
- Advocates for public pay disclosures, like the AFL-CIO, say it’s time compensation and workforce metrics were revealed, according to the Journal. Critics argue that the ratios can be inflated or deflated based on whether some employees are excluded from the count, what companies set as median pay, and outsourcing or offshoring practices.
Pay-ratio disclosures are an example of the kind of transparency employees are increasingly expecting from employers.
As tools like Glassdoor and LinkedIn begin to make salary information public, workers are having pay conversations at work and employers may find they need to respond with better information about how pay is set.
Additionally, with states adopting new pay equity laws, more employers are taking a second look at their compensation strategies to ensure fairness. As conversations around diversity and inclusion rise in tenor, employers that aren't proactive in reviewing their compensation programs may fall behind as competitors work to demonstrate that pay equity is a priority.