CEO pay ratio rule provides new view of executive compensation

The Public Record

Investors, the media and the public generally have long been able to see how much executives at publicly-traded companies are paid. A new requirement as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, however, is shining new light on how a chief executive officer’s pay compares to workers in the company.

The regulation requires companies to disclose the ratio between CEO pay and the median employee for fiscal years starting on or after Jan. 1, 2017. Proxy statements filed this spring are providing the first glimpse at how Milwaukee-area companies stack up.

Comparing those companies isn’t exactly straightforward. The SEC allows companies to exclude certain non-U.S. employees, including up to 5 percent of the total. They can annualize the pay of a permanent employee who was with the firm for part of the year, but part-timers cannot be converted to full-time equivalents and seasonal or temporary employee pay cannot be annualized.

Those restrictions mean the median employee at Menomonee Falls-based Kohl’s Corp. is a part-time associate with total compensation of $8,976. By contrast, Kevin Mansell, outgoing Kohl’s CEO, made $11,339,206 in 2017, a ratio of 1,264 to 1.

Among area publicly-traded companies that had reported ratios by mid-April, Kohl’s had the highest ratio. Milwaukee-based truck equipment manufacturer Douglas Dynamics Inc. had the lowest, at 47 to 1.

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Arthur covers banking and finance and the economy at BizTimes while also leading special projects as an associate editor. He also spent five years covering manufacturing at BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.

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