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A new rule that will shed light on the rising wealth gap between America's CEOs and average workers could put some healthcare companies with large numbers of low-wage employees in the public's crosshairs. The Securities and Exchange Commission said last week that it is moving forward with new compensation disclosure requirements under the 2010 Dodd-Frank financial reform law which will force publicly traded corporations to report the ratio of their CEOs' compensation to their median employee pay.
“Once you take into account those different levels of service outside of the acute-care setting, it could make the (pay) ratio even steeper,” said Steve Sullivan, Principal, at executive compensation firm Pearl Meyer & Partners.
Healthcare company boards also contend they need to offer large pay packages to lure top talent in a challenging and complicated industry. Investors may ultimately overlook a high pay ratio if they are still getting large returns. “As long as shareholders feel like the organization is performing and the individuals in place are sustaining that, the market will pay what the market will bear,” Sullivan said.