Pay Ratio Disclosure

Summary

This practice note discusses the pay ratio rule found in Item 402(u) (17 C.F.R. § 229.402(u)) of Regulation S-K (pay ratio rule). The pay ratio rule was adopted on August 5, 2015, by the U.S. Securities and Exchange Commission (SEC) and requires most public companies to disclose the relationship between the median annual pay of its employees and the annual pay of its principal executive officer (PEO). The pay ratio rule implements Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (111 P.L. 203, 124 Stat. 1376) (Dodd-Frank) to provide shareholders and others with a company-specific metric that can be used to evaluate the PEO's compensation.