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Focus on Public Companies: SEC Votes to Propose Rules for Pay Ratio Disclosure

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The Securities and Exchange Commission (SEC) has voted 3-2 to propose a new rule that would require public companies to disclose the ratio of the compensation of its CEO to the median compensation of its employees.
September 24, 2013

The Securities and Exchange Commission (SEC) has voted 3-2 to propose a new rule that would require public companies to disclose the ratio of the compensation of its CEO to the median compensation of its employees.

The new rule, required under the Dodd-Frank Act, would not prescribe a specific methodology for companies to use in calculating a “pay ratio.” Instead, companies would have the flexibility to determine the median annual total compensation of its employees in a way that best suits its particular circumstances. The proposed rules would not apply to certain registrants, including emerging growth companies and smaller reporting companies.

“This proposal would provide companies significant flexibility in complying with the disclosure requirement while still fulfilling the statutory mandate,” said SEC Chair Mary Jo White. “We are very interested in receiving comments on the proposed approach and the flexibility it affords.”

The proposal will have a 60-day public comment period following its publication in the Federal Register. To view the proposal, please click here.

 

Under U.S. Treasury Department guidelines, we hereby inform you that any tax advice contained in this communication is not intended or written to be used, and cannot be used by you for the purpose of avoiding penalties that may be imposed on you by the Internal Revenue Service, or for the purpose of promoting, marketing or recommending to another party any transaction or matter addressed within this tax advice. Further, RubinBrown LLP imposes no limitation on any recipient of this tax advice on the disclosure of the tax treatment or tax strategies or tax structuring described herein.

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