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CEO Pay Ratio Disclosure: Now is the Time for Comments on the SEC's Proposed Rules

October 30, 2013

By The Global Compensation, Benefits & ERISA Practice Group

December 2nd is the deadline for comments on the SEC's proposed rules for disclosing the ratio of CEO pay to the median pay of all other employees. Employers who want to minimize the burden of the final rules - or to delay them - need to voice their concerns in November because the SEC is facing concerted pressure to retreat from the flexibility that employers would have under the current proposal. There are many points that employers may reasonably raise. We are currently working with the American Benefits Council to submit comments.  For a list of key considerations, or to receive information about our efforts, please send an email request to

or . Meanwhile, here is further information – all from within the past month -- that may be useful:

  • An article titled "

    " includes the following quotation that indicates a common pay ratio challenge facing multi-national and other large employers: "In order to calculate a median, a company needs to have collected and centralized [payroll] information on every applicable employee."

  • The National Investor Relations Institute has submitted a

    to the SEC that concludes with a well-stated series of recommendations for proposed changes.

  • This

    occurred on October 1st, and included 375 corporate executives and compensation professionals. Findings include: 56% of those surveyed who expressed compliance concerns, from gathering data, to sampling properly, to identifying their median employee.

  • This

    from the Economic Policy Institute cites the CEO pay ratio for 2012 (273:1), and refers to that ratio as being 14 times greater than in the mid-1960s (20:1). The article includes a chart showing that the ratio over the past 15 years has generally dropped slightly (from about 300:1 in 1997). During that period, there was nevertheless significant volatility indicating that CEO pay has roughly correlated to market performance. For instance, market downturns in the early 2000s and 2008-9 saw the ratio drop each time to 200:1, while upturns around 2000 and 2007 saw the ratio exceed 350:1.

  • On Sept. 18th, the SEC issued its proposed CEO pay ratio disclosure regulations, found here

    with Proposed Rules /   /