The compensation divide between CEOs and employees narrowed slightly for big US banks in 2018, the second year that CEO Pay Ratio disclosures were mandated by the SEC.
An S&P Global Market Intelligence analysis of compensation disclosures from publicly traded US banks with assets totaling at least $20 billion found that the median CEO pay ratio in 2018 was 87-to-1. By comparison, the median CEO pay ratio for US bank CEOs in 2017 was 94.5-to-1.
Mandated by the Dodd-Frank Act, the CEO Pay Ratio rule requires that public companies release total CEO compensation, the median total compensation of all other employees—including part-time employees and those based outside of the US—and the ratio between the two. The rule, which went into effect in 2018, was designed to provide a window for shareholders, corporate watchdogs, and employees to better understand how a company's compensation practices work. But the metric has also faced some pushback, as skeptics question its usefulness given the flexible structure companies can use to determine the pay ratio.
"It's almost an arbitrary number," said Deb Lifshey, a managing director at compensation advisory firm Pearl Meyer, in an interview. "In 2010, it was sort of meant to guilt-shame large corporations. It's not driving decisions."