SEC Proposes Pay Ratio Disclosure Rule

The Securities and Exchange Commission (SEC), in a contentious open meeting and pursuant to a 3-to-2 party-line vote, recently proposed to add new Item 402(u) to Regulation S-K to implement the pay ratio disclosure requirements of Section 953(b) (Section 953(b)) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).¹

Consistent with Section 953(b)'s requirements, proposed Item 402(u) would require certain public companies to disclose in specified filings:

• the median² of the annual total compensation of all employees of the issuer, except the issuer's principal executive officer (i.e., the issuer's chief executive officer or the individual acting in a similar capacity) (PEO);