CEO Pay Ratio
The CEO pay ratio compares the chief executive's total compensation to the median employee's, as disclosed under Item 402(u — Dodd-Frank 953(b)).
One number, one methodology footnote
Since 2018, US public companies must disclose the ratio of CEO annual total compensation to the median annual total compensation of all other employees. The median employee is identified using a methodology the company chooses and discloses (headcount snapshot, W-2 wages, etc.), which limits comparability across companies.
The ratio is widely quoted in press coverage of executive pay, but its cross-company use is rough: a two-employee startup and a 2-million-employee retailer compute their medians differently.
Frequently asked
Where is the pay ratio disclosed?
In the DEF 14A, usually near the pay-versus-performance table. Note: the PvP table itself does not include the ratio; it is a separate Item 402(u) disclosure.
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