The Advisors' Blog

– Broc Romanek

Recently, I blogged about how Fortune 500 compensation committees have received letters from a group of 48 institutional investors requesting them to disclose more information on workforce compensation practices relative to CEO pay. These letters note that since “disclosure of the median employee’s pay provides a reference point for understanding the company’s workforce,” companies should move “to help investors put this pay information into the context of your company’s overall approach to human capital management” with more expansive disclosure.

Now, the NY Comptroller – which was a signatory to those letters – has announced agreements with five companies to withdraw a shareholder proposal on a related topic. That shareholder proposal urges companies to adopt policies that take into account the compensation of their workforce when setting CEO pay – and the companies’ agreements range from adding “human capital” disclosure, to enhancing workforce benefits, to committing to consider the CEO pay ratio when determining executive pay. For those reading this blog for a while, you know that we have been advocating the use of internal pay ratios as an alternative tool for compensation committees to consider since peer group benchmarking is tainted due to the slippery slope of most companies deciding to pay CEOs in the top quartile for decades…