We suspect nearly everyone with an interest in the business world is aware of the new rule issued by the U.S. Securities and Exchange Commission. The chief regulating agency overseeing the securities industry recently declared that companies that are publicly traded will have to start reporting the gap in the ratio between what the company CEO makes and the median pay of a company worker.
This move is one that was called for five years ago by the Dodd-Frank Law. Now that it's been announced, it's expected to take effect starting in 2017. Not surprisingly, business leaders are not pleased. There is speculation that the U.S. Chamber of Commerce will sue to try to block the move.
The new rule is widely acknowledged as a response to the growing concern in the country over pay disparity. By some estimates, the average gap between CEOs and their median workers was about 20 to 1 50 years ago. Today, it's about 300 to 1.
The public objection to the rule expressed by businesses is that coming up with the two numbers to do the comparison will be too hard and costly. The argument goes that CEO pay changes year to year and includes hard-to-measure elements besides salary, such as bonuses, stock compensation and more. At the same time, for global corporations say pay in different countries is so variable that it will make a median number meaningless.
But there are some observers who suggest that what businesses are really worried about is that the worms from the opened can won't be able to be put back in -- triggering a possible tsunami of business disputes that pit labor, consumers, investors and governments against each other.
Calls are being made for more open and honest debate about this issue. Meantime, where disputes arise, we have the forum of the courts through which those seeking to protect individual or business interests can pursue justice.