An SEC Rule on Global Pay Could Embarrass Companies

Every year an insurer called Protective Life (PL) crunches the numbers for its shareholders to show the cost of pensions promised to executives and derivative instruments used to hedge risk. The calculations are pretty complex. Yet when it comes to figuring out how the total compensation of its chief executive officer compares with the median pay of its employees, Protective wants to take a pass.

The Birmingham (Ala.) insurer is one of 18 businesses and industry groups urging the Securities and Exchange Commission to dial back a requirement to publish such a pay ratio under the new Dodd-Frank financial reform law. The rule requires U.S. publicly traded companies to determine what they pay each employee globally in salary, bonus, and benefits and then find the one whose pay falls at the exact midpoint to compare with the CEO's compensation. By disclosing this ratio, advocates say, compensation would be more transparent and accountable to investors and employees.