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In "How compensation committees should treat the CEO pay ratio disclosure," Willis Towers Watson advises companies to avoid taking any actions that will inadvertently subject their compensation committees to additional duties and liabilities associated with the CEO pay ratio disclosure. Assuming the compensation committee's role and responsibilities reflect the current norms and no expansion is desired, the firm suggests that the committee's role be limited to reviewing the proposed proxy disclosure - i.e., not taking any formal action on it or taking actions that would be inconsistent with a limited role, such as expanding the committee's charter responsibilities or unmindfully including the disclosure in the CD&A.

The memo also advises companies and their compensation committees to steer clear of peer group pay ratio comparisons. Suggested considerations include:  

• Should you include peer pay ratios in the proxy?  It will be very difficult for companies to include any type of peer comparison in the 2018 proxy, simply because relevant data will not yet be published. Yet, the temptation will exist for late filers or 2019 filers to consider including these comparisons in their disclosure. As noted, peer comparisons further the work of pay critics even if a good ratio reflects well on your company.
• What if your good ratio turns bad?  A fantastic pay ratio for the current year does not mean it will look as good in future years. SEC counsel will likely advise you that once you compare your ratio with peers, you should continue to do so for future years even though the ratio may look worse. 
• Would pay ratio comparisons conflict with your disclosure? We’ve already noted that the SEC clearly indicated that comparisons across companies are not meaningful for shareholders. To reinforce this notion, many companies are considering a disclaimer in their disclosure, similar to that used with non-GAAP financial disclosures, which instructs shareholders that pay ratio comparisons may not be an accurate comparison among companies. Companies will want to remain consistent in their thinking on this issue. If they include a disclosure, they should not then turn around and embrace peer comparisons.
• Will employees focus on the ratio, or on median pay? We believe that the typical reaction of most workers will be that their CEO pay ratio seems high, regardless of how it compares to peers. The typical worker will be laser focused on the median pay level for its industry or geography, or why they might be paid below median. Arguments that your company has a better ratio than peers, and is therefore a better place to work, really won’t help assuage employees. But discussions about how the company pays market rates and drilling down into more geographic-centric median pay levels certainly can help provide some reassurance.
• Will the ratio influence executive pay decisions? Compensation committee consideration of peer pay ratios raises a CD&A disclosure question of whether the compensation committee used that information in a material way that requires the comparison to be disclosed in subsequent year proxies. Specifically, it flags how the committee looked at the pay ratio league table, and whether it influenced its pay setting decisions, requiring the pay ratio table to be disclosed in the CD&A.  This is a potential trap for the unwary that should be thought through.

While the firm doesn't necessarily advocate against expanded compensation committee involvement, it makes a strong case for only doing so purposefully and with careful deliberation as to the potentially broad implications of doing so.