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Pay Ratio

Sep 20, 2018

CEO Pay Ratio: Perspectives on the First Year and a Look Forward

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As the dust has settled on the first round of CEO pay ratio disclosures, a few things are clear: companies spent considerable time and money calculating and disclosing their pay ratios, many CEOs worried about the response to their pay ratio and, most importantly, the reactions of investors, special interest groups and the press were much more muted than expected. It appeared that the most interested group was the employees, and they were interested in how their own compensation compared to the median compensation, rather than to what their companies’ pay ratio was.

The first round of disclosures did not get us any closer to settling the long-running debate as to whether pay ratio disclosure provides useful information for investors. Some continue to argue it is a tool for special interest groups to raise the drum beat of wage inequality and to wag a finger at perceived corporate greed, while others believe it sheds light on a company’s compensation philosophy. A company’s pay ratio may become a more useful data point when it is analyzed over time and compared to industry peers.

We reviewed and analyzed the CEO pay ratio disclosures of the 400 companies in the S&P 500 that disclosed their CEO pay ratio on or before July 20, 2018.

Information about the CEO pay ratio by industry sector, market capitalization, revenues and number of employees is presented at the end of this insight.

Read this section of the 2018 Corporate Governance Survey.

Authors and Contributors

Stephen T. Giove

Partner

Capital Markets

+1 212 848 7325

+1 212 848 7325

New York

Doreen E. Lilienfeld

Partner

Compensation, Governance & ERISA

+1 212 848 7171

+1 212 848 7171

+1 650 838 3804

+1 650 838 3804

New York

Lona Nallengara

Partner

Capital Markets

+1 212 848 8414

+1 212 848 8414

New York

Gina Lee

Associate

Capital Markets

+1 212 848 5092

+1 212 848 5092

New York