New Policies Regarding the Pay of CEOs

money handThere are quite a few people that like to compare their salaries with others. Even if it is the CEO of the company, they still do this, despite being aware that they would only be saddened because their own packages would probably be less. If you are one of these people, you are in luck. The new rules in the employment industry share views similar to yours, and so all public companies will now have to reveal the difference between their CEO pay and the average salary of their staff. These polices are going to be officially proposed next Wednesday. They will be considered by the concerned authorities, and there is a good chance that they might actually be enforced next year, which is just a little over three months away.

The ratio between the salaries will vary from company to company. For enterprises with higher salary packages, it would probably be less than those organizations which pay their employees only meager amounts.

As much as the government is in favor of these polices, the companies are definitely not. They believe the enforcement of the rules would lead to many problems and increased costs as well. The rules require companies to evaluate the median compensation of their employees. This can be done if the pay for every employee is counted, but the process is time consuming and costly. Moreover, the compensation includes health care and other benefits that are given to employees. The pension plans would also have to be considered for which additional calculations would have to be made. As such, the entire process can become quite complex. A significant amount of cost would also be incurred. A research indicates that compliance costs can be as much as $2 million.

Companies have issues with the increased expenses and implementation difficulties. Most of them believe the efforts to be pointless because the results would not be very useful and would share no valuable insights for both the employees and the investors. Transparency would also come into play, and might pressure companies to pay lesser amounts to their CEOs.

Whatever the associated problems may be, the fact that the policies will probably be implemented soon enough cannot be ignored. If you are an employer, pull out your pay books and prepare the comparison, and if you are a worker, prepare yourself for the blinding facts.

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