SEC Calls Out CEOs; Tries to Rein in Greed on Wall Street

Companies now will have to disclose to investors how the compensation of their CEOs compares to the median pay of their workers. That's because the SEC voted 'yes' to a measure that had been tucked into the 2010 Dodd-Frank law, amid concerns that huge pay packages at financial firms, such as Lehman Brothers, contributed to the financial crisis by encouraging company executives to take excessive risk. It's been a controversial measure. Supporters hope it will pressure corporate boards, at firms with big pay gaps, to rein in CEO raises. Those against the measure say the disclosures will impose significant compliance costs on companies and could actually mislead investors if worker pay rates vary markedly. Some observers point out that the rule – which is aimed at giving investors useful information- isn't very useful at all when it comes to assessing the actual value of a CEO. Geoff Colvin, Author of 'Humans are Underrated', points out 'There are some industries where people are paid less than in other industries. The ratios are going to be different and it has nothing whatever to do with the skill of the CEO or whether the CEO is worth it.' What is clear is that it took five years to adopt this rule, much to the dismay of labor unions and many Democrats who point out that the law only requires disclosure and does nothing to force companies to close the gap between CEO pay and worker pay.

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