The Downside of Full Disclosure

Interesting fact: The SEC’s requirement of companies to disclose CEO pay has actually been driving executive salaries up, not down.

Why? The Board of Directors looks at the salaries of peer companies and assigns their own CEO a higher compensation. No Board wants to feel like it hired a dime-store CEO.

There’s something naïve about the new S.E.C. rule, which presumes that full disclosure will embarrass companies enough to restrain executive pay. As Elson told me, “People who can ask to be paid a hundred million dollars are beyond embarrassment.”

See Also:
Open Season –New Yorker

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