CEO Pay Ratios aren’t creating a stir with employees, but gender equity issues are top of mind.
3800 large U.S. companies released ratios of CEO pay to median employee compensation for the first time in early 2018. The rule, a last minute addition to the 2010 Dodd-Frank financial reform act, had caused some consternation in HR circles, with expectations that high multiples of CEO pay to median income could cause a reaction among employees.
A recent survey by executive compensation consulting firm, Pearl Meyer, indicates that few questions are arising from the pay ratio disclosures, but suggests that concern about gender equity issues is rising. Pearl Meyer surveyed senior executives and outside directors from 244 companies to evaluate the quality of corporate communications about compensation.
Here are a few of the findings:
- Barely half (51%) of respondents characterize the overall quality of their organization’s communications efforts as good or excellent. 41% feel that employees’ understanding of the company’s compensation philosophy is not good.
- Only 9% of respondents report questions regarding the CEO Pay Ratio disclosures, but 21% are receiving questions about gender pay equity and 41% expect questions to increase in the future.
- Only 30% of respondents have clear and detailed information regarding gender pay equality to share with their employees. 18% have a plan in place to address issues.
The survey summary report characterizes the results as “mediocre at best,” indicating room for progress in the way organizations communicate about compensation. The executive summary and the full report are available on the Pearl Meyer website.
Executive Summary: Communicating Compensation in 2018, Pearl Meyer, 2018.