SEC approves CEO pay ratio rule
Published: August 5, 2015 - Pensions & Investments
Public companies must disclose the ratio of CEO pay to median employee pay
under a rule adopted Wednesday by the Securities and Exchange Commission.
The rule, mandated by the Dodd-Frank Wall Street Reform and Consumer
Protection Act, was narrowly approved 3-2 by a sharply divided commission.
Commissioner Daniel M. Gallagher Jr. called it “a nakedly political rule to once
again effect social change” promoted by the AFL-CIO and other groups, but
Commissioner Kara M. Stein argued that it will be useful to investors. “As
investors increasingly focus on corporate governance and executive compensation
issues at public companies, the pay ratio disclosure will provide another metric
that is useful on many fronts, such as say-on-pay votes,” Ms. Stein said.
Chairwoman Mary Jo White said in her opening remarks that while the
information “comes with a cost,” the final rule was adapted to give companies
“substantial flexibility” in determining the pay ratio, including the use of
estimates and sampling.
The final rule excludes registered investment companies such as money
managers, emerging growth companies, smaller reporting companies, foreign
private issuers and registrants filing under the U.S.-Canadian
multijurisdictional disclosure system.
Original Story Link: http://www.pionline.com/article/20150805/ONLINE/150809937/sec-approves-ceo-pay-ratio-rule