July 18, 2017
Pay Ratio: What Are Studies Worth?
– Broc Romanek
This is why it may be wise to question the value of a study before you put much stock on it. Read the thing before you comment. This CFO.com article highlights a new “American Accounting Association” study that claims – even when controlling for the portion of pay linked to stock performance – the relationship between a CEO pay ratio & stock price remains strong.
The study isn’t out yet, so we can’t really analyze how this conclusion was reached. But given that pay ratios aren’t yet publicly disclosed (and even when they are, it ain’t gonna be apples & apples), I am dubious. Not to mention that I hate seeing the first attempt to externally benchmark what is supposed to be an internal look! The proper benchmarking of pay ratios is that companies should be watching to see how their own ratios fare over time – not comparing their ratios to other companies…
Coming This Thursday! “Annotated Model Pay Ratio Disclosures”: For those registered for the upcoming “Pay Ratio & Proxy Disclosure Conference,” tune in on July 20th – this Thursday! – for the first in a series of three monthly webcasts that serve as a pre-conference: “Pay Ratio Workshop: What You Need to Do Now.”
When you go to the webcast page on July 20th, you will be able to download a set of “Annotated Model Pay Ratio Disclosures“ in both PDF & Word format. The second webcast is on August 15th; the third webcast is September 27th. Register for the “Pay Ratio & Proxy Disclosure Conference” to be able to access these webcasts.