The SEC recently adopted rules implementing Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”). Section 953(b) directs the SEC to expand current disclosure requirements to require disclosure of the ratio of the median of the annual total compensation of all employees to the annual total compensation of the CEO of the company. The implementing rules were proposed in September 2013, and the SEC received more than 287,400 comment letters on the proposal. The comment letters addressed the proposed rule as a whole (including commenters that supported or opposed the rule in its entirety), as well as comments directed toward particular requirements of the rule, such as its application to foreign, part-time, temporary, and seasonal employees. As adopted, the rule closely follows the approach set forth in the proposing release; however, the Commission made some revisions in the final rule that should allow more flexibility when implementing the requirements. Companies that are subject to the rule will be required to provide the disclosure starting with the first fiscal year beginning on or after January 1, 2017.

THE NEW CEO PAY RATIO DISCLOSURE REQUIREMENTS -

The final rule adds new paragraph (u) to Item 402 of Regulation S-K, which requires disclosure of the following...