& Securities

On February 6, 2017, Acting SEC Chairman Michael S. Piwowar issued a public statement titled “Reconsideration of Pay Ratio Rule Implementation.” He directed the SEC staff to reconsider the implementation of the rule and to determine as promptly as possible whether additional guidance or relief may be appropriate. The reconsideration is to be based on comments from the public, which he requested be received within the next 45 days.

Chair Piwowar announced his understanding that some companies, as they prepare for complying with the new disclosure requirement, are having unanticipated difficulties that may hinder them from being ready in time. For calendar year companies, the CEO pay ratio disclosure would first become required in 2018 filings (e.g., proxy statements and Form 10-Ks) and cover 2017 compensation.

“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.”

If your company wants to increase the likelihood of relief being given by the SEC, now is the time to submit a comment.

A copy of the full public statement is available here.

Efforts are also underway on Capitol Hill and by the White House to roll back provisions of the Dodd–Frank Wall Street Reform and Consumer Protection Act. See Weil’s February 6, 2017 Alert. The SEC adopted the pay ratio disclosure rule in 2015 to implement Section 953(b) of the Dodd-Frank Act. The rule will require an SEC reporting company to disclose the ratio of the median of the annual total compensation of all employees (excluding the CEO) to the annual total compensation of the chief executive officer.