Pillsbury Winthrop Shaw Pittman

SEC proposes pay ratio disclosures

By Eric M Green, Bradley A Noojin and Justin J Bintrim

The Securities and Exchange Commission (SEC) has proposed rules under the Dodd-Frank Act to require public companies to disclose the ratio of the annual total compensation of their principal executive officer (PEO) to the median annual total compensation of all employees.    

As directed by section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the proposed rules would amend Item 402 of Regulation S-K to require issuers to disclose: the median of the annual total compensation of all employees of the issuer, excluding the PEO; the annual total compensation of the PEO; and the ratio of the median disclosed to the annual total compensation of the PEO (e.g. 1 to 50).

The pay ratio disclosure would be required in all filings that require disclosure of executive compensation matters under Item 402 of Regulation S-K, including annual reports, proxy statements, information statements and certain registration statements. Emerging growth companies, smaller reporting companies and foreign private issuers would be exempt from this rule…

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