CEO Pay Ratio

One of the most controversial provisions of the Dodd-Frank Act is the CEO pay ratio rule. This rule requires that public companies report CEO pay as a ratio of the median employee pay. And while this seems like a relatively easy computation, many large multinationals are arguing that it is a difficult and expensive proposition. Compensation around the world is measured in different ways, depending on government regulations about social benefits, healthcare, and taxes. Additionally, whether part-time employees should be included in the calculation has become a contentious issue. Since wages overseas are often lower than in the U.S., companies are eager to exclude foreign workers. Either way, the rule will be expensive: The SEC has estimated the cost to all companies in the first year will be $1.2 billion.