The SEC has adopted rules requiring companies to disclose the pay ratio between their CEO and median compensated employee.

Last week, the Securities and Exchange Commission (the SEC) adopted final rules requiring companies to disclose the pay ratio between their CEO and median compensated employee (the CEO Pay Ratio). The rules are effective for fiscal years beginning on or after January 1, 2017, so the CEO Pay Ratio disclosure will not be required until 2018. The final rules make several changes to the proposed rules, including unexpected changes to the workers used for purposes of calculating the CEO Pay Ratio. Observers widely expect that these rules may be challenged in lawsuits and that Congress may amend the statute before the new rules become effective. However, companies subject to these rules should begin to evaluate their ability to comply and their disclosure strategies.