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The Daily

With SEC Pay Disparity Rule Now Official, What Companies Will Stand Out?

Chris Gaetano
Published Date:
Aug 13, 2015
whippedWith the Securities and Exchange Commission approving a new rule mandating that companies disclose the pay ratio between the CEO and the median employee, what companies are likely to have the most noticeable disparities? An analysis by Bloomberg, using publicly available information, finds that McDonald's would top that list, with its CEO making $7.29 million a year versus the $11,324 of its median employee, leading to a pay gap ratio of 644, more than 200 points higher than its closest competitor in this area, Community Health Systems. 

Bloomberg notes, however, that the McDonald's CEO does not even come close to being among the highest paid corporate executives, and its ratio is skewed by the fact that many of its employees make about a dollar more than the minimum wage. It noted that JP Morgan actually has much higher disparities but reliance on the median worker obscures this. 

The rule has been controversial, even on the commission itself, where the vote fell largely along partisan lines. Opponents, such as the Business Roundtable, said that the regulation imposes a significant administrative burden on companies in order to provide information that is largely immaterial to investment decisions. However supporters, such as the California Public Employees' Retirement System, said the ratio can give insight into how effectively a company manages its human capital and will also aid in say-on-pay shareholder votes.