How Much Do CEOs Make Compared to Their Workers?

The Securities and Exchange Commission approved a new rule Wednesday morning requiring publicly traded companies to disclose the pay gap between chief executives and their workers.

Chief executives' pay is already disclosed in company proxy statements, so what's new is that firms will now have to publish their median worker compensation, or the number at which half of employee pay is above and half is below.

That figure will then be compared to the chief executive's compensation, starting in 2017, with financial statements released the following spring.

The requirement passed by a 3-2 vote. Commissioners Daniel Gallagher and Michael Piwowar, both Republicans, cast the no votes.

Commissioner Kara Stein, who voted in favor of the rule, said the ratio would be "valuable" to investors and could give insight into how companies manage human capital.

Gallagher borrowed a phrase from Justice Antonin Scalia, calling the pay ratio requirement "pure applesauce."

Both Gallagher and Piwowar said that there was no evidence the pay ratio would benefit shareholders and that there was already good data available for investors to make informed decisions on executive compensation.

A study by the Economic Policy Institute earlier this year found that in 2014, chief executive pay was 303 times higher than the average worker's pay.

The SEC's action stems from the 2010 Dodd-Frank law, which was intended to protect investors after the 2008 financial crisis.

Here's why some companies and lobbying groups have balked at the ratio disclosure:

Time-consuming and costly

The SEC estimated the requirement would cost companies about $73 million, but the U.S. Chamber of Commerce puts the price tag far higher -- at an "egregious" $700 million a year or more.

The chamber said most large companies do not have a centralized payroll, which would make the cost of compiling data "prohibitively high."

No meaningful information

The U.S. Chamber of Commerce and other business groups have said the...

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