One of the more controversial measures of the Dodd-Frank bill is its requirement that companies report the ratio of their CEO’s compensation to that of their median employee. Critics of this provision have claimed that for large companies with employees and subsidiaries throughout the world, compliance with this measure alone could cost millions of dollars a year, due to the difficulties in identifying the median employee. This paper demonstrates that the Securities and Exchange Commission, which is charged with implementing this provision, has the latitude to direct companies to calculate the figure using a statistical sampling procedure which would greatly reduce the costs of compliance while still achieving a satisfactory degree of reporting accuracy.
- Executive Compensation,
- Regulation K,
- Dodd Frank,
- Securities Disclosure
Available at: http://works.bepress.com/michael_ohlrogge/1/