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Why CEO Salaries May Come Back to Earth

Compensation packages for chief executive officers in the U.S. have careened out of control. However, the stage is set for what could be a major correction in CEO salary as the American public and shareholders alike find more and more reasons to question the status quo. More information is the key.

In October, the Securities & Exchange Commission (SEC) is expected to release the final rules for a controversial proposal that would require every publicly traded company to disclose its CEO-to-worker pay ratio. The Dodd Frank Act charged the SEC with the responsibility to make the rule, but it has taken this long for the SEC to make any headway. During the SEC’s public comment phase, 128,000 comments flooded in about the rule. It was a lightning rod for controversy as governance advocates and business interests argued the pros and cons of CEO salary disclosure.

Now that progress is on the horizon, many CEOs will have something to sweat about. The data could lead many investors to wonder whether CEOs’ job performance really warrants their big paychecks, and it could also raise regular folks’ ire and overall distrust for corporate America.

Read more: The Motley Fool

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