Korn Ferry Hay Group Study: Companies Unprepared to Comply with SEC’s CEO Pay Ratio Disclosure Ruling
Respondents Concerned About Ratio Not Reflecting Reality as Well as Potential for Misleading Public Perception
The ruling requires public companies to disclose the ratio of the total compensation of their Chief Executive Officer (CEO) to the total compensation of the median employee. Data will first have to be compiled for fiscal year 2017 for disclosure the next fiscal year.
Key Survey Findings
- Forty-five percent of respondents were at least “somewhat concerned” with understanding the steps needed to make the disclosure.
- Forty-six percent were at least “somewhat concerned” with obtaining and collating the needed employee data in connection with the calculation of the CEO pay ratio.
- Forty-seven percent were at least “somewhat concerned” with what to disclose in the various filings.
- Fifty-one percent indicated that they were at least “somewhat concerned” with determining the best methodologies to use in data collection and analysis.
In addition, 53 percent of respondents were at least “somewhat concerned” about ensuring that the ratio reflect reality and about public perception.
“Many executives are troubled by the CEO Pay Ratio mandate – primarily
because it is not a logical indicator of pay within an organization,”
Due to the complexity of the filings, a majority (58 percent) of respondents said that they were “somewhat likely” to seek external support in connection with the required disclosure and related obligations. When combined with the 11 percent that were “very likely” to use outside advisors, it appears that most companies (69 percent) want some guidance in determining and disclosing their CEO pay ratio.
About the Study
Leaders from nearly 150 publicly traded companies took part in Korn
Ferry Hay Group’s CEO Pay Ratio survey during May and
The full study can be found here.
Tracy Kurschner, 612-309-3957