The 'Out Of Touch Company' Law

[TrueBlueTerrier]

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Could US government plans to oblige companies to publish the ratio between their chief executive's salary and that of their 'average' employee be adopted here?

This morning's Financial Times carries an interesting story about the plans with warnings from lawyers that they will prove to be a "logistical nightmare" when they are introduced as part of the Dodd-Frank financial reform act.

They will be a public relations nightmare too, given that according to the FT, the typical S&P500 CEO earned about $7.5m last year. There's no better way to show for corporate America to illustrate that it's out of touch with the man on the street than by disclosing that the boss earns 50 or 500 times what the average worker takes home.

The coalition Government has shown little interest in similar disclosure here, although David Cameron has made a point of saying that top-level public servants shouldn't be paid more than 20 times the lowest-paid employee of that organisation. It was that edict which lay behind some last-minute haggling over the salary of Moya Greene, the new chief executive of Royal Mail, in June.

And banks will have to get used to the idea of uncomfortable disclosure on pay given that from next year they will have to publish the number of UK-based employees earning more than £1m (the threshold may ultimately be lower).

That will be another PR challenge to the degree that word reaches me that some banks may be looking at shifting some London-based top earners to other offices where the disclosure rules do not apply.