WASHINGTON – Federal regulators are requiring companies to reveal the pay gap between CEOs and their employees.
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The Securities and Exchange Commission voted Wednesday to order most public companies to disclose the ratio between their chief executives' annual compensation and median, or midpoint, employee pay. The new rule will take effect starting in 2017.
The issue of executive pay has generated heated debate. The 3-2 vote came on one of the most controversial rules the agency has put forward in recent years.
The regulators acted under a mandate from the 2010 law that reshaped regulation after the financial crisis. Outsize pay packages — often tied to the company's stock price — were blamed for encouraging disastrous risk-taking and short-term gain at the expense of long-term performance.