This afternoon, the SEC announced that it had adopted interpretive guidance in connection with the pay-ratio disclosure requirement, which mandates public company disclosure of specified pay-ratio information, beginning with the upcoming 2018 proxy season. Generally, the guidance provides a more expansive reading of three topics: company reliance on reasonable estimates, the use of existing internal records to determine the median employee and non-U.S. employees, and the use of other recognized tests and criteria (such as published IRS guidance) to determine employee/independent contractor status. At the same time, Corp Fin issued separate guidance regarding the use of statistical sampling (to be addressed in a subsequent post) and updated CDIs on topics related to the new SEC guidance. For a more complete discussion of the pay-ratio rule, see our Cooley Alert, SEC Adopts Final Pay-Ratio Rule.
One of the arguments that has often been used to oppose the Dodd-Frank pay-ratio provision is that the rule does not really provide information that benefits investors; instead, the argument goes, the real animus for the rule is a political effort to focus attention on inequality. Now, an analysis of governance ratings from Bank of America Merrill Lynch, reported in the WSJ, suggests that pay-ratio information just could provide some warning signs that investors may find valuable.
For the avoidance of doubt, Acting Corp Fin Director confirms conflict minerals and pay-ratio disclosure rules still in effect
Cydney Posner As reported by the WSJ, at the SEC Speaks conference today, to avoid any doubt on the matter, Acting Corp Fin Director Shelley Parratt reminded companies that, notwithstanding the two requests for public comment issued by Acting SEC Chair Michael Piwowar and all of the Executive Orders aimed […]
by Cydney Posner She may be the new leader of the Conservative Party, but her party affiliation may not be entirely obvious from the speech delivered in July by UK Prime Minister Theresa May, launching her national campaign. In her vision of creating “an economy that works for everyone,” May […]
by Cydney Posner On Friday, the House passed H.R. 5485, the Financial Services and General Government Appropriations Act for fiscal year 2017, which includes appropriations for the SEC. As noted here and here, included as part of the bill were several amendments directed at defunding SEC rules, potential rules and […]
by Cydney Posner Support for management on say-on-pay votes for the 2016 season so far (data as of May 18) continues at about the same level as in prior years – a median approval rate of 95% among the S&P 500, according to Compensation Advisory Partners, with only three companies […]
U.S. Chamber of Commerce won’t challenge pay-ratio rules — at least for now — and will focus instead on conflict minerals challenge
by Cydney Posner The WSJ is reporting that, contrary to all expectations (including my own), “the U.S. Chamber of Commerce isn’t planning to mount a legal challenge to the Securities and Exchange Commission’s pay ratio rule.”
Reputation management experts advise how to manage a company’s reputation in light of pay-ratio disclosure
by Cydney Posner Even though pay-ratio disclosure will not need to appear in proxy statements before 2018, companies are still starting to fret about how their ratios will compare with their peers and whether an unseemly gap might be detrimental to their reputations and unsettle their work forces. In this […]
by Cydney Posner At an open meeting this morning, SEC Commissioner Daniel Gallagher contended that, in its efforts to adopt pay-ratio rules that conform to the Dodd-Frank mandate, the SEC was just putting itself in a box – viewing the Dodd-Frank mandate as so prescriptive that the SEC could only […]
by Cydney Posner The SEC may adopt final pay-ratio rules, mandated by Dodd-Frank, possibly as early as next week. More significantly, according to the WSJ, the final rules will be adopted “without broad exclusions sought by companies.” The pay-ratio proposal requires most public companies to disclose the relationship of CEO pay […]