Clifford Chance

SEC Adopts Pay Ratio Disclosure Rules

17 August 2015

On August 5, 2015, the SEC adopted a final pay ratio disclosure rule that requires a public company to disclose (1) the median of the annual total compensation of all employees (excluding the CEO), (2) the annual total compensation of its CEO, and (3) the ratio of those two amounts.

Companies must comply with the pay ratio disclosure rule for the first fiscal year beginning on or after January 1, 2017. In practice, companies do not need to disclose this pay ratio until early 2018 in the later of its annual report on Form 10-K for the 2017 fiscal year or the related definitive proxy or information statement that incorporates executive pay disclosure into the Form 10-K.

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