TheCorporateCounsel.net

End of year & pushing out content that I’ve been meaning to blog about. Love this article entitled “The corporate Web site is dead, long live the new corporate Web site.” And in this video, learn about Coca-Cola on brand journalism – “Coca-Cola Journey” – and the death of the press release. Here’s an article analyzing the success of Coke’s journey into storytelling one year later…

The Long Shadow of the Pay Ratio Rule

Here’s something that Mark Borges blogged a few weeks ago over on CompensationStandards.com:

Although the future of the CEO pay ratio rule is somewhat uncertain, the corporate community continues to move forward to prepare for its eventual effectiveness in 2017 (and the attendant disclosures in the 2018 proxy season). While much attention has been given to the potential impact of this new disclosure, both externally (the various constituencies that will see and react to this information) and internally (your employee population), an ancillary consequence of the disclosure has been less discussed. Specifically, I’m talking about the potential state and local provisions that may tie directly to a company’s pay ratio.

As you may recall, over the past few years there have been a couple of initiatives introduced that would link the operation of a new law or regulation to the disclosed CEO pay ratio. For example, in 2014 a California legislator introduced a bill that would have modified the state’s corporate income tax rate to a sliding scale based on a company’s pay ratio. The rate would have been as low as 7% percent on the basis of net income if the ratio was no more than 25 to 1. At the other end of the scale, the rate would have been as high as 13% if the ratio was more than 400 to 1. Although the bill passed out of two state Senate committees, ultimately it failed on the Senate floor (in a tight 19-17 vote). In addition, in the same year the Rhode Island legislature considered a bill that would have given preferential treatment in receiving state government contracts to companies whose pay ratio between its highest-paid executive and its lowest paid full-time employee was 31-1 or less.

While, to my knowledge, neither initiative has made it all the way through the legislative process, the underlying concept is alive and well. Yesterday, the New York Times reported that the City Council of Portland, Oregon had voted to impose a surtax on companies whose CEOs earn more than 100 times the median pay of their rank-and-file workers. As indicated in the Times, “[t]he tax will take effect next year, after the Securities and Exchange Commission begins to require public companies to calculate and disclose how their chief executives’ compensation compares with their workers’ median pay.”

The article to goes on to say that the idea may not be limited to Portland: “Portland officials said other cities that charge business-income taxes, such as Columbus, Ohio, and Philadelphia, could easily create their own versions of the surcharge. Several state legislatures have recently considered bills structured to reward companies with narrower pay gaps between chief executives and workers.”

It certainly appears that if the CEO pay ratio rule goes forward, we may see more proposed laws and rules that seek to “piggy-back” on the disclosure.

– Broc Romanek