SEC discusses pay ratio disclosure to disappear

Six months ago, almost to the day, the Securities and Exchange Commission adopted the final rule that requires public companies to disclose the ratio of their CEO’s compensation against the median compensation of its employees. The ratio disclosure would apply to all companies required to provide executive compensation disclosure under Item 402(c)(2)(x) of Regulation S-K.


Beginning with their first fiscal year on or after January 1, 2017, this ruling (Section 953(b)) within Dodd-Frank’s say-on-pay mandate, would require IROs to “justify” their CEO value to The Street, employees and even consumers.

But yesterday, SEC Acting Chairman Michael S. Piwowar announced a review of the rule. The SEC is pursuing feedback from corporations about the complications with the disclosures. Many of our clients are working the very difficult math in their efforts to meet the ruling.

Public companies, and entire sectors, that have a large population of lower paid employees are very concerned that the ratio will be unjust in context to other sectors. Certainly, there are situations where CEOs have egregious salaries, but overall, the “shareholder communications  industry” questions the value of the disclosure to investors and their decision process.


“In order to better understand the nature of these difficulties, I am seeking public input on any unexpected challenges that issuers have experienced as they prepare for compliance with the rule and whether relief is needed. I welcome and encourage the submission of detailed comments, and request that any comments be submitted within the next 45 days.

I have also directed the staff to reconsider the implementation of the rule based on any comments submitted and to determine as promptly as possible whether additional guidance or relief may be appropriate.”

In addition to financial reporting and IR working their company’s numbers, our Proxy Production Team has been occupied guiding clients with the visual representation. This has driven many of our proxy materials’ conversations.

Our 2017 Proxy Design Styles addresses many visual and branding issues. Lean more here.

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