In 2018, public companies will be required to disclose what can be a tough subject for many HR professionals: CEO pay ratios. If your company doesn’t already have a strategy in place for disclosing this information, it’s time to begin thinking about how you will prepare employees for this information.
The required information will be the ratio of CEO pay to the median employee pay starting for 2017. When considering a strategy of how to disclose the information, it’s important to remember that more than just CEO pay will be released. Another number to be included will be the actual employee median pay, which may concern some employees if their pay is below the median. Accordingly, there are multiple issues that may need to be addressed. When creating your plan for CEO pay-ratio disclosure, here are a few things to consider:
- Disclosing additional pay ratios.
For companies that have many seasonal or temporary workers, it may be beneficial to include multiple pay ratios in the report. For example, a pay ratio for full-time employees only is likely to be lower than one which includes all pay for 2017. - Calculate ratios early.
Don’t wait until the last minute to do the math. Know what company pay ratios are now. This will give you enough time to plan your disclosure and calculate the additional pay ratios. - Know your story.
Know your company’s story. A company’s values and mission can help explain compensation decisions for employees, as well as future plans to add additional benefits or increase pay. - Be prepared with definitions.
Most employees will most likely not be fully versed in the lingo of proxy statements. Be prepared to give employees the knowledge they need to fully understand the statements if they ask or have concerns.
For more information on CEO pay ratio disclosures, keep an eye on our free newsletter.