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Normally workloads lessen after the end of proxy season, but compensation committees may find themselves unusually busy this year, as companies prepare for their CEO Pay Ratio disclosures. Even amid the uncertainty about whether the rule may be repealed, experts are urging boards to still prepare.
While firms are still preparing for the rule, most have not publicly disclosed their pay ratio. Data also suggests that firms are still concerned about the impact that such disclosures can have on employees. Among 125 companies, 57% are anticipating a negative impact, according to a survey conducted in March 2017 by Pearl Meyer.
According to the firm, boards should consider whether to include in the disclosure messages about the pay ratio or the methodology behind the calculation. Whether to disclose the rationale for the median employee pay, such as how it relates to the business, is also seen as a consideration for the board.
Pearl Meyer also notes that a consideration for the board is whether to include the pay ratio disclosure in the compensation discussion and analysis (CD&A) or in an alternative section.
More than three quarters (79%) of companies do not believe the pay ratio disclosure will provide any useful information to investors, according to Pearl Meyer.