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The pay ratio rule is not something that directors will be able to ignore, said Sharon Podstupka, a Vice President at Pearl Meyer & Partners.
According to Podstupka, it is important for companies to show how their pay ratios were calculated and why their pay is fair and reasonable. The important thing is that the company “tell a story” and “tell that story well,” she said.
Pay ratio disclosures might take up a lot of space in proxy statements, and it is important for a company to understand that their proxy is not just an external communication tool to shareholders, but also an internal communication tool, according to Podstupka.