By Bora Yagiz, Compliance Complete
NEW YORK, Oct. 9 (Thomson Reuters Accelus) - The U.S. Securities and Exchange Commission has proposed a rule that would make public companies disclose the pay gap between their top executive and the rest of the staff. But the divided 3-2 vote by which the proposal was advanced reflects the fierce debate between opponents to call it difficult and unnecessary, and advocates who say it provides a useful measurement for shareholders who want to rein in excessive compensation.
The proposed rule represents an attempt to alleviate the classical principal-agency problem, where the interest of the senior management may front-run that of the shareholders’ through overcompensation. It may also help regulators in furthering a growing effort to improve corporate risk-management practices. But the challenges of compiling useful figures may be daunting. (more…)