It’s stupid for two reasons. First, it does not provide any meaningful information to an investor. Investors know, and have known for some time, how much CEOs get paid, in cash and securities and perks. That information is very detailed. (I sometimes look at the health care packages the top Goldman Sachs guys get and wonder what exactly the company gets for these sums. Does a cardiac surgeon follow these blokes round the golf links?) Moreover, investors know how much any company spends on personnel costs. Any normally well-informed person has a rough idea of what people in retail or people in investment banking make, and so can formulate an idea of what the CEO:minion ratio is, to the extent the investor thinks that ratio is meaningful. And for the life of me, I cannot think of any use to which I, as an informed investor (and one who does actually read SEC disclosure), can put that information.
Making the information even more useless is the second reason it’s stupid. There’s no reliable way to measure this ratio or make it comparable across companies. The SEC has (thankfully) built in enough flexibility to make it workable for a registrant but that very flexibility also makes it less useful, because two similar companies (to the extent any two companies might be similar, which they aren’t) could legitimately reach widely divergent ratios.
So the rule ends up being both useless and imprecise. The only real purpose of this rule is CEO-shaming. I can think of cheaper ways of doing that.