New rule to expose CEO-worker pay gap is a move towards a new social pact

Dodd-Frank Act forces US corporations to reveal what their CEOs earn compared with the average worker, but some companies are already embracing pay transparency to build corporate reputation, says Phil Drew

Inequality is back in the spotlight as the US Securities and Exchange Commission prepares to vote on pay ratios. For the first time, America's largest businesses could be forced to publish how much more their chief executives earn than the average worker.

The disclosure, required under the 2010 Dodd-Frank Act, has long been in the pipeline. If voted in, businesses can expect the new rules to inspire greater levels of scrutiny. Research by Harvard Business School shows people have no idea how much CEOs earn and, when asked, grossly underestimate their boss's pay. In the US, CEOs earn up to 300 times more than the average salary, yet most estimate the gap to be a fraction of this, at 30 times the average wage.

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