Market Overview

Corporations To Begin Disclosing CEO-To-Employee Pay Ratio This Year

Corporations To Begin Disclosing CEO-To-Employee Pay Ratio This Year

Back in 2015, the U.S. Securities and Exchange Commission (SEC) adopted a rule that obliged all public companies to disclose the ratio of the compensation of their chief executive officers compared to the median pay of their employees.

“The rule provides companies with substantial flexibility in determining the pay ratio, while remaining true to the statutory requirements,” SEC Chair Mary Jo White said at the time.

While the new regulation was announced 17 months ago, it only came into force on the first day of 2017. “Companies will be required to provide disclosure of their pay ratios for their first fiscal year beginning on or after Jan. 1, 2017,” the press release read.

The Specifics

As explained by the SEC, the new rule “does not apply to smaller reporting companies, emerging growth companies, foreign private issuers, MJDS filers, or registered investment companies. The rule does provide transition periods for new companies, companies engaging in business combinations or acquisitions, and companies that cease to be smaller reporting companies or emerging growth companies.”


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