CEOs making too much green may soon be feeling red in the face.
Starting in 2017, the Securities and Exchange Commission will require companies to share a metric comparing the CEOs' compensation to that of their median employee, the agency announced this week. Republicans and business groups have criticized the rule, which was included in Dodd-Frank five years ago, as "nakedly political," "more harmful than helpful" and an effort to "name and shame" business leaders.
"In terms of comparable data, it's worthless," said Tom Quaadman, vice president of the Center for Capital Markets Competitiveness at the U.S. Chamber of Commerce. "The ratios tell you nothing about whether you should invest in a fast food chain or a Wall Street firm—neither ratio tells you how the company is doing."
But proponents contend that the metric will provide valuable information to investors about how companies manage human capital and will at least be useful for year-to-year comparisons. So which companies and industries are most likely to report especially high metrics? The Big Crunch looked at more than 2,300 publicly traded companies and compared average salary data for each industry to CEO compensation to see which companies should expect to get hit when the mud-flinging begins.