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CEO pay ratios: populism or good governance?

Companies should enhance disclosures on remuneration-related matters to avoid more regulation.

Published Sun, Oct 23, 2016 · 09:50 PM
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EXCESSIVE CEO pay has been the subject of extensive media coverage, adding pressure on boards and regulators to respond appropriately.

Some regulators are considering implementing "CEO pay ratios" - which address the relationship between chief executive officer (or senior executive) pay with the pay of other employees in the company. Most rules require only disclosure, but some proposals would cap CEO pay at multiples of average or median pay of all other employees.

What are CEO pay ratios?

Reports supporting CEO pay ratios often quote management consultant Peter Drucker, who in the 1970s recommended that companies publish a "corporate policy that fixes the maximum compensation of a…

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