Type: Articles Published
From the time that Dodd-Frank was passed, the Pay Ratio Disclosure rule has been very controversial, and there have been questions as to whether the Pay Ratio Disclosure rule would be revoked or postponed. However, it is now clear that the rule will not be delayed, and that the Pay Ratio Disclosure will be required, beginning in 2018.
Preparing the Pay Ratio Disclosure is likely to be complicated and time consuming, particularly in the first year that the pay ratio is calculated and disclosure is made. Identifying the median employee, whose annual total compensation is compared to the annual total compensation of the CEO, will mean examining and comparing the compensation of all employees of the registrant, or developing a methodology to take a statistical sample of employees. At this time, companies should be preparing to identify a “median employee” under the Pay Ratio Disclosure rules. This article summarizes the requirements of the Pay Ratio Disclosure rules that relate to the identification of the median employee and the elements of the disclosure itself.
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