By: James F. Reda, David M. Schmidt & Kimberly A. Glass
Over six years ago, the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) was signed into law. Implementation of this Act by the Securities and Exchange Commission (“SEC”) continues to unfold slowly and with increasing uncertainty following this year’s election.
The initial proposal of the CEO pay ratio disclosure rule was released on Sept. 18, 2013 with comments due Dec. 2, 2013. The SEC had targeted fall of 2014 for action on this regulatory initiative, which was pushed back until the rules were finalized on Aug. 18, 2015. The final rules require that CEO total annual compensation, as stated in the summary compensation table, be compared to the median total annual compensation of all the other employees of the company, both foreign and domestic. The impact of these final rules on CEO pay remains a matter of speculation. Nonetheless, CEO pay ratio disclosures will become a part of the corporate executive compensation disclosure package for fiscal year reports beginning on or after Jan. 1, 2017, which for many would be at their 2018 annual shareholders’ meeting.