SEC Issues Final CEO Pay Ratio Rule

On August 5, 2015, the Securities and Exchange Commission (the "SEC") voted 3-2 to adopt the final "pay ratio" disclosure rule. This long-awaited, controversial rule is issued pursuant to Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, close to five years after its enactment. The pay ratio rule requires disclosure of the reporting company's CEO's annual total compensation, the median annual total compensation of substantially all employees other than the CEO and the ratio between the two amounts. The final pay ratio rule is similar to the proposed rule, with certain changes intended to alleviate compliance costs and to provide companies with additional time to prepare for the disclosure.