Pay Ratios And Sustainability

California Senator Benjamin Allen would like to establish an Office of Sustainability within the Governor’s Office of Business and Economic Development, also known as GO-Biz.  His bill, SB 950, would require the Office of Sustainability to establish guidelines and criteria that provide for the certification of a sustainable business operating in California.  

The bill requires that the Office of Sustainability take into consideration, among numerous other factors, whether the company "guarantees pay equity and a reasonable executive compensation ratio compared with employee compensation".  The bill doesn't reference the Securities and Exchange Commission's pay ratio disclosure requirement in Item 402 of Regulation S-K nor does it limit certification to companies subject to the reporting requirements of the Securities Exchange Act of 1934. 

Senator Allen's bill passed out of its first policy committee today on a 7-1 vote.  It is set for hearing by the Senate Appropriations Committee this morning.  Meanwhile Senator Skinner's bill that would create graduated tax rates for publicly traded companies based on their compensation ratios has not yet been heard in committee.  See California Proposes To Base Tax Rate On Compensation Ratio.