Implications of the SEC’s Proposed CEO Pay-Ratio Disclosure Rule

As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, on September 18, 2013, the Securities and Exchange Commission (“SEC”) voted 3-2 in favor of a new proposed rule that would require companies to disclose: (1) the median of the annual total compensation of all employees of the issuer, excluding the issuer’s CEO (or the equivalent); (2) the annual total compensation of the issuer’s CEO (or the equivalent); and (3) the ratio of those two amounts.

Based on a review of the proposed rule and following semi-public comments of Keith Higgins, Director of the Division of Corporation Finance at the SEC, the following summarizes key points and considerations in the proposed rule. For a more detailed analysis of the proposed rule and other related topics, please join us for another installment in our eLunch webinar series on November 21, 2014, entitled “Preparing for the 2014 Proxy Season.”