Securities and Exchange Commission Adopts Final Rules Regarding Pay Ratios
Yesterday, a sharply divided Securities and Exchange Commission (SEC) adopted final rules regarding disclosure of executive pay ratios as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act. The rules, which were originally proposed in September of 2013, will be effective for most companies beginning with their first fiscal year starting on or after January 1, 2017. Under these rules, SEC Regulation S-K Item 402 will be amended to require most public companies to determine and disclose the median total annual compensation of all of its employees, excluding the principal financial officer, as well as the total annual compensation of its principal executive officer, and the ratio between those two figures. A company will only be required to determine the median total annual compensation of all employees once every three years, subject to a more frequent determination in the event of a change in its employee population that it believes would significantly impact the pay ratio disclosure.
For more information, please contact the Corporate Finance and Securities Group at Lane Powell: