Current Pay Governance Viewpoints

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  The CEO Pay Ratio: How Should Compensation Committees Evaluate Their Ratios? Measuring the Impact of “Median Employee Pay”

  By Ira T. Kay and Blaine Martin

  In our study of 389 S&P 500 companies, the median CEO pay level is $12.1 million, consistent with many other studies. The median of the “median employee pay” level, as disclosed in the ratio section of the proxies, is $70,129. This latter value has surprised many observers, as it is much higher than expected and — more importantly — 39% higher than the average U.S. private sector salary of $50,620 (142 million employees). This employee pay level was previously unknown. Read More
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  CEO Pay As Governed by Compensation Committees: The Model Works!

  By Ira T. Kay, John R. Ellerman and Sara Bivins

  Last year, two articles in the Wall Street Journal and Harvard Business Review criticized the overall CEO pay model at U.S. companies. The authors of both articles, Robert Pozen and S. P. Kothari, link their criticisms to shortfalls in executive compensation governance (e.g., poor disclosure, misleading metrics, and selecting inappropriate peer groups) that have been allowed and/or encouraged by Board Compensation Committees. In this article, we address these critiques. Read More
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  The Elimination of the Performance-Based Requirement Under Section 162(m):

  By Diane Lerner and John R. Sinkular

  Any changes to long-standing executive pay rules-regardless of whether they concern taxes, accounting, or regulations-raise questions and uncertainty about whether they will lead to wholesale changes in how executive pay is delivered. Read More
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  U.K. Companies Must Comply With Gender Pay Gap Reporting

  By John R. Ellerman

  While U.S. companies are addressing the new requirement to report CEO pay ratio statistics to shareholders, U.K. companies are now required to report statistics on the gender pay gap. Such reporting is mandated for no later than April 4, 2018, and the reporting must occur on the company's public-facing website and submitted directly to the government using its dedicated online reporting service. Such reporting is in direct response to the U.K. Equality Act 2010 (Gender Pay Gap Information) Regulations 2017. Read More

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