Securities and Exchange Commission Rules on Pay Ratio Disclosure
Earlier this month the Securities and Exchange Commission adopted a final rule requiring a publicly held company to disclose the ratio of the compensation received by its chief executive officer to that of the median compensation received by its employees.
The rule is intended to:
- Provide companies with flexibility in calculating this pay ratio.
- Help inform shareholders when voting on “say on pay.”
Mary Jo White, Securities and Exchange Commission Chair, said:
The Commission adopted a carefully calibrated pay ratio disclosure rule that carries out a statutory mandate. The rule provides companies with substantial flexibility in determining the pay ratio, while remaining true to the statutory requirements.”
The new rule will go into effect on January 1, 2017. Companies will be required to provide disclosure of their pay ratios for their first fiscal year beginning on or after this date.
To read the announcement from the Securities and Exchange Commission and the guidelines of the determination, follow this link to the SEC.gov website Security and Exchange Commission Media Release on Pay Ratio Disclosure or click this link to download the announcement as a PDF from Fulcrum Partners Resources.