SEC Reconsiders CEO
Pay Ratio Rule
February 13, 2017
SEC adopted the pay ratio disclosure rule in August 2015 to implement
Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer
Protection Act. The rule requires a public company to disclose the ratio
of the median of the annual total compensation of all employees to the
annual total compensation of the chief executive officer.
Michael S. Piwowar said, "Based on comments received during the
rulemaking process, the Commission delayed compliance for companies
until their first fiscal year beginning on or after January 1, 2017.
Issuers are now actively engaged in the implementation and testing of
systems and controls designed to collect and process the information
necessary for compliance. However, it is my understanding that some
issuers have begun to encounter unanticipated compliance difficulties
that may hinder them in meeting the reporting deadline.
In order to better understand the nature of these difficulties, I am
seeking public input on any unexpected challenges that issuers have
experienced as they prepare for compliance with the rule and whether
relief is needed. I welcome and encourage the submission of detailed
comments, and request that any comments be submitted within the next 45
I have also directed the staff to reconsider the implementation of the
rule based on any comments submitted and to determine as promptly as
possible whether additional guidance or relief may be appropriate.
I understand that issuers need to be informed of any further Commission
or staff action as soon as possible in order to plan and adjust their
implementation processes accordingly. I encourage commenters and the
staff to expedite their review in light of these unique circumstances."
Bolten, President and CEO of Business Roundtable, added "Business
Roundtable welcomes the SEC’s announcement that it will reconsider the
CEO pay ratio rule.
“CEO compensation is already publicly disclosed. The pay ratio rule,
which requires chief executives to certify what is an arbitrary and
often meaningless number, provides no material information to
shareholders or investors.
“Public companies provide significant disclosures that are meaningful
for market participants. Reconsidering the CEO pay ratio rule is
consistent with the SEC's mission to focus on rules that protect
investors, maintain fair and orderly capital markets and facilitate the
creation of long-term shareholder value.”