SEC Proposes Pay Ratio Disclosure Rules

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On September 18, 2013, the Securities and Exchange Commission (“SEC”) approved for public comment proposed rules to implement Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (2010) (the “Dodd-Frank Act”) regarding the requirements for new pay ratio disclosures. Section 953(b) of the Dodd-Frank Act directed the SEC to expand the existing required compensation disclosures by amending Item 402 of Regulation S-K to require companies to disclose:

• The median of the annual total compensation of all employees of the issuer (excluding the chief executive officer)
• The annual total compensation of the chief executive officer
• The ratio of the median of employee compensation to chief executive office compensation.

Section 953(b) of the Dodd-Frank Act has generated extensive debate while the SEC considered approaches for implementing the provision. Proponents, including many consumer and shareholder advocacy groups, argue that the disclosure of this pay ratio will provide investors with the data to judge whether a CEO’s pay is commensurate with a company’s performance. Opposition has been just as vigorous from companies and business organizations, such as the U.S. Chamber of Commerce, maintaining that the rule is onerous, unnecessary, complex and prohibitively expensive. Topics of discussion will include:

• New Pay Ratio Disclosure Requirement
• Methodology for Identifying the Median Employee Compensation
• Filings Requiring New Pay Ratio Disclosure
• Implementation of Pay Ratio Disclosure

West LegalEdCenter will offer CLE credit.