It didn't require microscopic examination of the Securities and Exchange Commission's pay ratio rule to find the gaping holes in it.
Proposed in September, the SEC's rule was yet one more attempt to rein in runaway executive compensation packages. The pay ratio essentially is a comparison of a public company's median employee compensation to that of its CEO.
Problem was, there were no teeth in the rule. Call it a guideline at best. The rule leaves it up to the company — i.e., the CEO and others in the C-Suite — to determine how to calculate median compensation of employees and total compensation of the CEO.
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Dan Cook
Dan Cook is a journalist and communications consultant based in Portland, OR. During his journalism career he has been a reporter and editor for a variety of media companies, including American Lawyer Media, BusinessWeek, Newhouse Newspapers, Knight-Ridder, Time Inc., and Reuters. He specializes in health care and insurance related coverage for BenefitsPRO.
