As we approach the end of 2018, it’s only natural to look back on some of the year’s events – and some non-events. For my money, one of the most significant non-events was the inauguration of CEO pay ratio disclosure, one of the evil spawn of Dodd-Frank.
In the interest of brevity, I’ll skip the background of the disclosure requirement, except to say that it seemed intended to shame CEOs – or, more accurately, their boards – into at least slowing the rate of growth in CEO pay. Some idealists may have actually thought that it would lead to reductions in CEO pay. Poor things; they failed to realize not only that all legislative and regulatory attempts to reduce CEO pay have failed, but also that such attempts have in every single instance been followed by increases in CEO pay.
So the 2018 proxy season, and with it pay ratio disclosures, came and went. Sure, there were media outcries about some of the ratios, but they failed to generate any traction. Companies may have incurred significant monetary and other costs to develop the data needed to prepare the disclosures, but their concerns about peasants storming the corporate gates with torches and pitchforks proved needless. Few, if any, investors – and certainly no mainstream investors – seemed to care about the pay ratios. Employees making less than the “median” employee didn’t rise up in anger. Even the proxy advisory firms seemed to yawn in unison.
So that’s that. Or so you’d think.