9 ms·

> "Under a financial overhaul passed by Congress in 2010, the Securities and Exchange Commission was supposed to require all publicly held companies to disclose

> "Under a financial overhaul passed by Congress in 2010, the Securities and Exchange Commission was supposed to require all publicly held companies to disclose the ratio of C.E.O. pay to the median pay of all other employees, but it has so far failed to put it in effect. Corporate executives have vigorously opposed the idea, complaining it would be cumbersome and costly to implement." -- Why would a ratio be costly to implement?

reustle 12y ago
Is this information already publicly available? Can we calculate it ourselves?
putlake 12y ago
Perhaps not costly, but definitely cumbersome. What's more, it will have the opposite consequence. In his book "Influence", Robert Cialdini wrote that making CEO pay public had the effect of raising exec pay across the board rather than check it, as the lawmakers had hoped.
- seunosewa 12y ago
  Isn't CEO pay of public companies already public? If so, the ratio would merely disclose the median employee's salary level.
- lotsofmangos 12y ago
  I can't see how it would be that cumbersome, calculators are lightweight, widely available and easily fit in a pocket. The thing about CEO pay rising after the information was made public was because it became a metric used by traders, so it started making financial sense to raise the CEO pay as it was thought to raise the company share price by more than the wage increase. Of course this only works until someone matches your raise, then you have to raise again to keep the signaling going to the market and then the returns from this strategy rapidly diminish. Now if the ratio was also public, then that would also become a market signal, but if you are a trader trying to gauge the health of a company then it should work in the favour of the employees, as if you are comparing two competing companies and trying to decide which one to bet on, if the CEO pay is the same and they are making similar profits, then the one with a smaller ratio will look like a much better bet. edit - also, given that publicising CEO compensation can increase CEO compensation, why do you think that publicising employee compensation would reduce employee compensation?
  - ptaipale 12y ago
    Calculators are lightweight, but to decide which five digits to punch into the calculator, you might need to hire both an accountant and a HR lawyer.
    - lotsofmangos 12y ago
      Any company large enough to make this in anyway confusing has several of those on staff already.
      - ptaipale 12y ago
        Doing nothing? Most likely they are already busy with something, and adding this means more resources and cost to produce reports for the government.
        lotsofmangos 12y ago
        If accounts and HR do not have the figures of what employees are paid already in a spreadsheet somewhere, in a form that is easy to run statistics on, then you have larger problems than producing reports for government. And given you have not answered, why do you think that publicising employee compensation would reduce employee compensation? You seem to be using the logic that the government tried something once and it did the opposite, so therefore all government policies do the opposite, rather than engaging with the potential outcomes of this specific idea.
        ptaipale 12y ago
        As explained elsewhere, a figure of gross pay is definitely somewhere, but whether that is the figure required by law to be reported, and a figure that someone will think is what should honestly be reported, that's already another matter. I did not argue that publicising employee compensation would reduce employee compensation, that was someone else. Perhaps you confuse authors.
- spacemanmatt 12y ago
  I'm sure they can find some spare CPU power to tally up the CEO's earnings. I'll be glad to throw a Raspberry Pi in if it helps their cumbersome counting effort.
uiri 12y ago
It is most likely not the ratio part but the median pay of all other employees part. You need to keep an ordered list of the pay of every single other employee and keep it up to date as people join and leave the company. Then there is the issue of accounting for part time or temp workers.
- ghshephard 12y ago
  I assure you that every company I've ever worked for has had that list of salaries at the tip of their fingers. This would be next to zero additional effort if it's only salary ratio. The problem is - you can easily play games with bonuses, stock options, etc... to make it appear that the CEO has a low salary.
- obstinate 12y ago
  So like SELECT MEDIAN(salary) FROM employees (That's valid Oracle.) I mean I get that there'd need to be some adjustments to normalize salary to yearly salary and factor in non-cash benefits, but come on.
  - hueving 12y ago
    So what you're saying is all that non-technical HR people have ever to do is normalize all of the employee salary data and load it into a database and then run this query? Easy peasy!
  - raverbashing 12y ago
    But in production this takes 3 Java developers, 2 Oracle "specialists", one year and a couple million dollars to implement.
    - spacemanmatt 12y ago
      Ah, back when I was a programmer without any SQL/DBA skills, I thought like this too. Now I know better than letting unskilled workers (e.g. lots of so-called DBAs, most developers) develop schemas or queries.
    - 12y ago
glhaynes 12y ago
One way of interpreting that is that they think the disclosure would cause discontent that would lead to their labor expenses rising.
bobbles 12y ago
Because they dont want to reduce their own pay, which in turn would mean they have to pay their employees much more than they do now
- cmdkeen 12y ago
  Or they find other forms of compensation that do not equal "pay" to game the figures. I'm sure the army of lawyers out there can find a loophole or two.
easytiger 12y ago
If the CEo is also a chairman and major shareholder isn't this all meaningless twaddle
jackmaney 12y ago
It isn't. Point me to a column of a table in a database containing all of your employee's salaries, tell me which one is the CEO's salary, and I can whip up a query to compute that ratio in less than a minute. EDIT: Well, okay, if the given RDBMS doesn't contain rank or median functions, then it'll take a bit longer to implement. But not that much longer.
- greggyb 12y ago
  The costly part is that many companies don't have this available as simply as you assume. As a BI consultant, this makes me feel very secure in my job and future business.

reustle 12y ago

Is this information already publicly available? Can we calculate it ourselves?

putlake 12y ago

Perhaps not costly, but definitely cumbersome. What's more, it will have the opposite consequence. In his book "Influence", Robert Cialdini wrote that making CEO pay public had the effect of raising exec pay across the board rather than check it, as the lawmakers had hoped.

seunosewa 12y ago
Isn't CEO pay of public companies already public? If so, the ratio would merely disclose the median employee's salary level.
lotsofmangos 12y ago
I can't see how it would be that cumbersome, calculators are lightweight, widely available and easily fit in a pocket. The thing about CEO pay rising after the information was made public was because it became a metric used by traders, so it started making financial sense to raise the CEO pay as it was thought to raise the company share price by more than the wage increase. Of course this only works until someone matches your raise, then you have to raise again to keep the signaling going to the market and then the returns from this strategy rapidly diminish. Now if the ratio was also public, then that would also become a market signal, but if you are a trader trying to gauge the health of a company then it should work in the favour of the employees, as if you are comparing two competing companies and trying to decide which one to bet on, if the CEO pay is the same and they are making similar profits, then the one with a smaller ratio will look like a much better bet. edit - also, given that publicising CEO compensation can increase CEO compensation, why do you think that publicising employee compensation would reduce employee compensation?
- ptaipale 12y ago
  Calculators are lightweight, but to decide which five digits to punch into the calculator, you might need to hire both an accountant and a HR lawyer.
  - lotsofmangos 12y ago
    Any company large enough to make this in anyway confusing has several of those on staff already.
    - ptaipale 12y ago
      Doing nothing? Most likely they are already busy with something, and adding this means more resources and cost to produce reports for the government.
      - lotsofmangos 12y ago
        If accounts and HR do not have the figures of what employees are paid already in a spreadsheet somewhere, in a form that is easy to run statistics on, then you have larger problems than producing reports for government. And given you have not answered, why do you think that publicising employee compensation would reduce employee compensation? You seem to be using the logic that the government tried something once and it did the opposite, so therefore all government policies do the opposite, rather than engaging with the potential outcomes of this specific idea.
        ptaipale 12y ago
        As explained elsewhere, a figure of gross pay is definitely somewhere, but whether that is the figure required by law to be reported, and a figure that someone will think is what should honestly be reported, that's already another matter. I did not argue that publicising employee compensation would reduce employee compensation, that was someone else. Perhaps you confuse authors.
spacemanmatt 12y ago
I'm sure they can find some spare CPU power to tally up the CEO's earnings. I'll be glad to throw a Raspberry Pi in if it helps their cumbersome counting effort.

uiri 12y ago

It is most likely not the ratio part but the median pay of all other employees part. You need to keep an ordered list of the pay of every single other employee and keep it up to date as people join and leave the company. Then there is the issue of accounting for part time or temp workers.

ghshephard 12y ago
I assure you that every company I've ever worked for has had that list of salaries at the tip of their fingers. This would be next to zero additional effort if it's only salary ratio. The problem is - you can easily play games with bonuses, stock options, etc... to make it appear that the CEO has a low salary.
obstinate 12y ago
So like SELECT MEDIAN(salary) FROM employees (That's valid Oracle.) I mean I get that there'd need to be some adjustments to normalize salary to yearly salary and factor in non-cash benefits, but come on.
- hueving 12y ago
  So what you're saying is all that non-technical HR people have ever to do is normalize all of the employee salary data and load it into a database and then run this query? Easy peasy!
- raverbashing 12y ago
  But in production this takes 3 Java developers, 2 Oracle "specialists", one year and a couple million dollars to implement.
  - spacemanmatt 12y ago
    Ah, back when I was a programmer without any SQL/DBA skills, I thought like this too. Now I know better than letting unskilled workers (e.g. lots of so-called DBAs, most developers) develop schemas or queries.
  - 12y ago

glhaynes 12y ago

One way of interpreting that is that they think the disclosure would cause discontent that would lead to their labor expenses rising.

bobbles 12y ago

Because they dont want to reduce their own pay, which in turn would mean they have to pay their employees much more than they do now

cmdkeen 12y ago
Or they find other forms of compensation that do not equal "pay" to game the figures. I'm sure the army of lawyers out there can find a loophole or two.

easytiger 12y ago

If the CEo is also a chairman and major shareholder isn't this all meaningless twaddle

jackmaney 12y ago

It isn't. Point me to a column of a table in a database containing all of your employee's salaries, tell me which one is the CEO's salary, and I can whip up a query to compute that ratio in less than a minute. EDIT: Well, okay, if the given RDBMS doesn't contain rank or median functions, then it'll take a bit longer to implement. But not that much longer.

greggyb 12y ago
The costly part is that many companies don't have this available as simply as you assume. As a BI consultant, this makes me feel very secure in my job and future business.