The Relevance and Effects of the Executive-to-worker Pay Ratio’ Disclosure

Abstract

The purpose of this conceptual paper is to analyze the say-on-pay policies and practices in 5 different countries: UK, USA, Switzerland, Germany and Australia. The focus of the research is on the disclosure of the executive-to-worker pay ratio. The author discusses about the relevance and effects of such practice on firm performance and employee motivation, loyalty and productivity, as well as on the investors’ decisions. This article addresses those issues through a comparative approach, by selecting pay ratio-relevant theoretical and empirical studies. The results indicate that the disclosure of pay ratio improves the firm’s and individuals’ performance and therefore it should be introduced as an obligatory part of the yearly remuneration report.

Key words:

• Say-On-Pay Policies
• Executive-To-Worker Pay Ratio
• Remuneration Disclosure Regulations
• Pay Ratio’ Disclosure Effects