CFOs at publicly traded companies are gearing up for coming Securities and Exchange Commission regulations that would require them to disclose how much money their top executives make.
The rules, which were first proposed two years ago to comply with the Dodd-Frank Act, would require publicly traded companies to disclose how much their CEOs make compared to a typical worker.
In a previously released statement, the SEC said the rules would "provide greater transparency and allow shareholders to be better informed when they vote to elect directors and in connection with advisory votes on executive compensation."
However, CFOs need clarification to prepare for the disclosures. First, finance executives need further guidance from the SEC as to what types of pay to include as compensation, according to The Wall Street Journal.
For example, in March, Houston-based Noble Energy disclosed that its former CEO made $8.5 million in direct compensation — 82 times more than the company's median employee. However, when the company disclosed the former CEO's compensation, it left out the roughly $1 million increase in the value of his pension, employer retirement contributions and perquisites the company provided, according to the report.
"If the SEC adopts rules on compensation ratio, we will conform the methodology by which we calculate that ratio to align with the SEC requirements," a Noble spokesperson told The Wall Street Journal. "Until rules are adopted, we expect to continue with the current methodology in our future disclosures."
CFOs also want the SEC to clarify the definition of "median employee" and whether foreign employees are to be included in the calculation, according to the report.
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