SEC Adopts Pay Ratio Rule

October 13, 2015

Authored by: Bryan Cave

On August 5, 2015, in a 3-2 vote, the SEC adopted the rule implementing the controversial pay ratio requirement pursuant to the Dodd-Frank Act. The rule requires companies to disclose:

  • the median of the annual total compensation of all employees, excluding the principal executive officer, or CEO;
  • the annual total compensation of the CEO (which is already required to be disclosed); and
  • the ratio of  these two amounts.

The new rule applies to companies required to provide executive compensation disclosure under Item 402(c)(2)(x) of Regulation S-K in proxy statements or annual reports on Form 10-K, as well as registration statements or other filings. Most companies are required to report the pay ratio disclosure for their first fiscal year beginning on or after January 1, 2017.

View Bryan Cave’s Client Alert on the Pay Ratio Rule.