Glass Lewis's "The How and Why of the CEO Pay Ratio: SEC Guidance" provides a balanced discussion of the recent SEC guidance on the pay ratio disclosure rule (reported on here), and proponent and opponent perspectives.
Particularly noteworthy, however, is this excerpt concerning how Glass Lewis intends to use the ratio in its proxy reports:
Glass Lewis intends to display the pay ratio as a data point in our Proxy Paper in 2018. At this time, however, we do not intend to incorporate the pay ratio into our assessment and analysis of Say-on-Pay proposals. We recognize that this data point might provide valuable additional information to shareholders on a company’s pay practices; however, we do not believe that this information is material for our analyses of the structures by which, and the disclosures of how, companies pay their NEOs.
As previously reported, ISS recently revealed its views about the disclosed ratio's relationship (or lack thereof) to the reasonableness of CEO pay - suggesting investors and others look to companies' narrative disclosures for important context, including company- and industry-specific factors that may drive considerable differences in ratios among companies.
Pay Ratio Teleconference Tomorrow: Register Now!
As a reminder, the Society Securities Law Committee's next pay ratio teleconference: "Pay Ratio Rules: Your Questions Answered - Next Steps" will be held tomorrow from 3:00 – 4:30 pm ET. The event is open to all Society members. Register for the teleconference here.
Among other things, the panel will discuss the SEC's September 21st guidance regarding estimates and mixing methodologies, the latest from ISS and Glass Lewis, and what companies are doing to determine their median employee and disclose and message their ratios.
Access oodles of relevant resources on our Pay Ratio topical page.