The Advisors' Blog

This blog features wisdom from respected compensation consultants and lawyers

April 29, 2014

Proposed California Legislation: Pay Ratios Tied to State Franchise Taxes

Broc Romanek,

Hat tip to Art Meyers of Choate Hall for alerting me to this proposed California legislation (SB 1372) that would peg a public company’s state franchise tax rate to the company’s pay ratio effective January 1st. The tax rates would vary between 7% and 13%. The compensation ratio compares the total compensation under the Summary Compensation Table for “chief operating officer or the highest paid employee” to the median compensation of all employees employed in the US. The bill also has a provision that increases a company’s applicable tax rate by 50% if it has a 10% or greater decrease in full-time US employees at the same time that the company increases contracted or foreign employees. Here’s more from this blog by Keith Bishop…