Dive Brief:
- The Securities and Exchange Commission has published a final rule requiring publicly traded companies to disclose the pay ratio between their CEOs and their median employees.
- The regulation is part of the 2010 Dodd-Frank financial sector reform law and is slated to take effect on January 1, 2017.
- Healthcare chiefs may face some heat once the rule goes into effect, considering that they are among the highest-paid executives in the country.
Dive Insight:
This provision, and the Dodd-Frank law which contains it, was passed in the aftermath of the Great Recession, when public anger at the corporate world and sky-high CEO pay had reached a fever pitch. As watchdog organizations have pointed out, the average CEO of a top American firm made somewhere between 150 to 373 times what the average worker made in 2014.
When it comes to the healthcare industry, big-name chief executives like CVS Health Corp.'s Larry Merlo and Community Health Systems' Wayne Smith make anywhere from $25 million to $35 million in annual compensation. That's a massive departure from what even high-paid employees such as doctors earn in the healthcare field—and that's not even considering paltry pay for jobs such as home health aides.
Most industries have pushed back against the rule, arguing that will be costly to comply and could present a misleading picture of corporate culture. Nonetheless, the provision will be going into effect in less than 18 months.