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Companies have long had to disclose what their CEOs make, but soon, for the first time, large companies will have to disclose how salaries at the top compare to their median compensation level for employees worldwide. It's a rule the Securities and Exchange Commission adopted as required by the Dodd-Frank financial law.
The idea was to give shareholders of companies more context for how executives are paid, but experts say this rule could lead to some unintended consequences.
Deborah Lifshey, Managing Director at Pearl Meyer, says most client companies are concerned about their workers' reactions when they find out how they fare relative to their peers.
"They're not really concerned about what the pay ratio actually is," Lifshey says. "They're more concerned about what will happen, how the media will react, what it will do with this data" — and how employees will react if they find out that they're paid less than the median for their company, or that a rival firm's median pay is higher.