SEC Adopts Final Rules On CEO Pay Ratio Disclosure

On August 5, 2015, the Securities and Exchange Commission (SEC) finalized rules requiring publicly traded companies to disclose the ratio of median compensation of all employees to the compensation of the principal executive officer. The SEC adopted the rules in response to the mandate of Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

When Will Compliance With the Pay Ratio Rules Be Required?

Issuers will be required to comply with the new rules with respect to compensation for full fiscal years beginning on and after January 1, 2017. Disclosure of the pay ratio will first be required in the annual report covering that fiscal year or, if filed later, the proxy or information statement for the next annual meeting following the end of that fiscal year, subject to a requirement that the pay ratio be filed within 120 days after the end of the fiscal year.