Last December, Portland, Oregon became the first city in America to pass an ordinance imposing an additional tax on the compensation of any chief executive officer of a publicly traded company doing business in Portland whose compensation is more than 100 times that of a median worker’s compensation. The ordinance, which affects about 550 firms, calls for a 10 percent surtax when the pay ratio of CEO to median worker is between 100 to 1 and 250 to 1. When that ratio exceeds 250 to 1, the surtax increases to 25 percent. We detailed the law in our December 22, 2016, article.
As we noted, the surtax was made possible in the first place by a 2015 Securities and Exchange Commission (SEC) rule requiring public companies to disclose the ratio of the compensation of their CEO to median employee compensation. The rule requires companies to disclose the ratio of the median annual total compensation of all employees, excluding the CEO, to the annual total compensation of the chief executive officer.