SEC Proposes Pay Ratio Rule

After more than three years and much controversy, the Securities & Exchange Commission on September 18, 2013 voted 3 to 2 to propose a rule implementing the requirement of Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act that a U.S. public company disclose the ratio of median annual total compensation of all employees to CEO total compensation.

The proposed "pay ratio" rule attempts to strike a balance between the statutory requirements and the concerns that many commenters have expressed regarding the anticipated costs of compliance. The proposal introduces much-needed flexibility regarding calculating the median annual total compensation of all employees.