SEC Publishes Final Rule on Pay Disclosure (Fed. Reg.)

The SEC final rule requiring a public company to disclose the ratio of the compensation of its CEO to the median compensation of its employees, was published in the Federal Register.

Pursuant to Section 953(b) of the Dodd-Frank Act, the final rule requires any such company to disclose (i) the median of the annual total compensation of all its employees except the CEO, (ii) the annual total compensation of its CEO and (iii) the ratio of those two amounts. Although the final rule allows the company to choose a methodology based on its own facts and circumstances to identify the "median employee," that same methodology must be utilized in the determination of the executive compensation.

The disclosure requirement will apply to all companies that are required to provide executive compensation disclosures under Item 402(c)(2)(x) of Regulation S-K. Such companies will be required to report the pay ratio disclosure for their first fiscal year beginning on or after January 1, 2017.

See: 80 FR 50103Related news: SEC Publishes Final Rule on Pay Disclosure (with Belosa Comment and Delta Strategy Group Summary) (August 6, 2015); SEC Staff Provides Additional Analysis Regarding Proposed Pay Ratio Disclosure Rules (with Lofchie Comment) (June 4, 2015).