The SEC has approved the controversial pay ratio disclosures:
The Securities and Exchange Commission today adopted a final rule that requires a public company to disclose the ratio of the compensation of its chief executive officer (CEO) to the median compensation of its employees. The new rule, mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, provides companies with flexibility in calculating this pay ratio, and helps inform shareholders when voting on “say on pay.” ...
The new rule will provide shareholders with information they can use to evaluate a CEO’s compensation, and will require disclosure of the pay ratio in registration statements, proxy and information statements, and annual reports that call for executive compensation disclosure.
The SEC did provide companies with some flexibility and exempted some small companies:
The rule addresses concerns about the costs of compliance by providing companies with flexibility in meeting the rule’s requirements. For example, a company will be permitted to select its methodology for identifying its median employee and that employee’s compensation, including through statistical sampling of its employee population or other reasonable methods. The rule also permits companies to make the median employee determination only once every three years and to choose a determination date within the last three months of a company’s fiscal year. In addition, the rule allows companies to exclude non-U.S. employees from countries in which data privacy laws or regulations make companies unable to comply with the rule and provides a de minimis exemption for non-U.S. employees.
The rule does not apply to smaller reporting companies, emerging growth companies, foreign private issuers, MJDS filers, or registered investment companies.
Still ....
For prior commentary from yours truly:
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Dec 3, 2014 ... The pay-ratio rule is an attempt to shame companies and their boards to advance the “social justice” goal of more equitable income distribution.
www.professorbainbridge.com/.../the-cost-of-playing-class-warfare-via-pay- ratio-disclosure.html
Nov 30, 2013 ... The company is then required to report the ratio between those two figures as a measure of the ... The possible failure of pay ratio disclosure.
www.professorbainbridge.com/.../what-if-ceos-cant-be-shamed-about-their- salaries-the-possible-failure-of-pay-ratio-disclosure.html
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Sep 26, 2013 ... Last Wednesday, a divided Securities and Exchange Commission issued proposed amendments to Item 402 of Regulation S-K. Section 953(b) ...
www.professorbainbridge.com/.../differing-perspectives-on-the-secs- proposed-ceo-pay-ratio-rule-and-who-speaks-for-calpers.html
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Aug 13, 2013 ... Section 953(b) of the Dodd-Frank Act required the SEC to develop disclosure rules requiring issuers to disclose the ratio of the “median” total ...
www.professorbainbridge.com/.../sec-likely-to-muffstatistical-sampling- employee-to-ceo-pay-ratio-disclosures.html
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