Question

Distributive justice refers to perceived fairness in the outcomes we receive compared to our contributions and the outcomes and contributions of others. For example, it’s likely that your boss is paid more than you are. Is that fair? Most people would say yes. However, according to the Glassdoor Economic Research Blog, CEOs in companies listed in the Standard & Poor 500 earn approximately 204 times what his/her median worker earns. Is that fair? Lots of people might disagree.

In 2011, the Securities and Exchange Commission adopted rules requiring publicly traded companies to offer their shareholders a non-binding advisory vote on the compensation of the company’s most highly compensated executives.

Beginning in 2017, pay ratio rules adopted by the Securities and Exchange Commission will require public companies to disclose the ratio of CEO pay to median worker pay in an effort to encourage pay transparency in the workplace. Companies must now explain large pay gaps to investors and will face new challenges explaining to workers why they make so much less than the boss and, possibly, peers or competitors. This new rule is intended to help inform shareholders when voting on “say on pay”.

What are your thoughts on this legislation?

• Will the pay ratio rule result in fairer pay for workers of public companies? Why or why not?
• Will the pay ratio rule assist shareholders in making informed decisions regarding their “say on pay” votes? Why or why not?
• Should the “say on pay” legislation be amended by make the shareholder vote mandatory rather than advisory? Why or why not?

Answer 1

1 Yaa it is fairer to workers as it is providing transparency in the work place.They should also know salary of top management as well as lower management .

2 Yaa it is intended to assist shareholders to make informed decisions .

3 Yaa it should be make mandatory as they are also the part owner of the Organization.