The SEC requested industry feedback on the pay ratio disclosure rule in response to unanticipated compliance difficulties reported by issuers. SEC Acting Chair Michael S. Piwowar called on Commission staff to "reconsider the implementation of the rule" and consider additional guidance or relief.
The SEC adopted the pay ratio disclosure rule in August 2015 in order to implement Dodd-Frank Section 953(b). As explained previously in a Cabinet news article, the adopted rule requires a public company to disclose (i) the median of the annual total compensation of all its employees, except that of the CEO, (ii) the annual total compensation of its CEO, and (iii) the ratio of those two amounts. Although the rule allows a company to choose a methodology based on that company's own facts and circumstances to identify the "median employee" and his or her compensation, the rule imposes limitations that could make this determination complicated for companies. Currently, companies are required to report the pay ratio disclosure for the first fiscal year beginning on or after January 1, 2017, which would result in disclosure in 2018.
The Acting Chair provided a form for the submission of detailed comments, and requested that comments be submitted within the next 45 days.
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