SPRINGFIELD, Mass. (WWLP) – Federal regulators want to force some CEOs to reveal how much more they earn than the people who work for them. The Securities and Exchange Commission voted Wednesday to order most public companies to disclose the ratio between the CEO’s annual pay and their average worker’s pay.
The 3-2 vote was one of the most controversial rules the agency has put forward in recent years. The new rule will take effect starting in 2017.
Publicly- traded companies with more than $75 million in total share value, or those earning more than $50 million every year, will have to disclose how much the CEO makes.
“I believe that’s a fair practice because the CEOs aren’t the only ones responsible for making that $50 million,” says Nathaniel Pike of Easthampton. “They couldn’t do it without the other people working for them.”
The AFL-CIO says the average S&P 500 company CEO made 373 times more than the average employee’s salary.
“I think the compensation that everybody gets connects with the efforts they put in,” says Mark Guthrie of West Springfield. “A CEO does a lot more, he eats, sleeps, and breathes the business.”
According to the Commerce Department, the average worker made $24.87 an hour in 2013. The country’s 200 highest-paid CEOs earned $22.6 million.
Massachusetts Senator Elizabeth Warren put pressure on the SEC to adopt this policy. Republicans have fought back, saying this new rule could mislead investors.