Dodd-Frank Executive Compensation Rules: SEC Proposes Rules for CEO/Employee Pay Ratio Disclosure

On September 18, 2013, the Securities and Exchange Commission voted 3-2 to propose a new rule implementing section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. This rule, requiring a public company to disclose the ratio of the median annual total compensation of all employees to the annual total compensation of the chief executive officer (the "Proposed Rule"), has been highly controversial. There has been significant concern over the practicality and administrative burden that could be imposed on companies by a requirement to calculate the median annual total compensation of all employees.

The Proposed Rule would amend Item 402 of Regulation S-K, but would not affect the 2014 proxy season and would not apply to smaller reporting companies, foreign private issuers, or "emerging growth companies" under the Jumpstart Our Business Startups ("JOBS") Act. If the final rule becomes effective in 2014, a company will be first required to make the