In an effort to salary-shame absurdly overpaid chief executives, the Securities and Exchange Commission adopted a new rule on Wednesday which will compel CEOs to report the ratio of their yearly earnings to the median salary of its employees.
While CEOs of public companies already had to disclose their salaries, the new rule is notable in that it forces the companies to compare these salaries to workers’ pay and confront head-on how fucked up capitalism is.
Companies and their lobbyists had worked hard to amend the rule, arguing that they should be allowed to exclude many foreign workers, who often make low wages. In the end, they mostly failed. Companies will only be able to exclude 5% of their foreign workforce from the calculations.
CEO salaries became one of the central rallying cries during the financial crisis, particularly as executives were compensated with millions of dollars despite overseeing crumbling businesses. Highly paid chief executives were often used to illustrate the wealth gap that had only been widened by the country’s economic woes.
In 2013, a report from the AFL-CIO found that CEOs of the biggest companies in the U.S. make on average 373 times the salary of a non-managerial employee. In 2012, CEOs’ pay rose 16 percent, compared with employees’ wages, which increased only 2.4 percent.
The rule will not officially go into effect until January 1, 2017 and the first ratios won’t have to be reported until 2018, so sit tight for another few years (and then a few centuries more) of extreme financial inequality.
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Image via AP.