The Securities and Exchange Commission is slated to adopt in October its final rules on implementing a proposed CEO pay ratio, said Laura D. Richman, counsel at Mayer Brown LLP, in a teleconference Thursday the law firm hosted discussing key proxy season issues.
The rule, proposed by the SEC in September, requires each company to disclose the median annual total compensation of all employees, excluding the CEO; the annual total compensation of the CEO; and the ratio of the two figures.
The SEC received more than 128,000 public comment letters on the proposed rule, more than 1,000 of them unique and not form letters, Ms. Richman said, citing SEC figures.
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 requires the SEC to develop rules to implement the ratio disclosure.
Ms. Richman said she used scheduling posted by the Office of Information and Regulatory Affairs of the Office of Management and Budget to determine that final rules will be issued in October.
“The SEC has missed plenty of these target deadlines before,” Ms. Richman said in the teleconference
SEC spokesman John Nester said: “These are the commission’s best estimates when the work is scheduled to be completed. But there is no update” on when the SEC will finalize rules. “Various factors can come into play” to cause a change in target dates.
“Even if the SEC adopts final pay ratio rules in 2014, it’s unlikely that pay ratio disclosure would be required in the 2015 proxy season,” Ms. Richman said.
Separately, the SEC targeted October for adoption of a final rule to require institutional investment managers to publicly report how they vote shares on executive compensation or golden parachute severance agreements, according to the OIRA. The rule was first proposed by the SEC in October 2010.
The SEC also targeted for October to release proposed rules on disclosure of hedging by executives and directors to offset any decrease in the market value of equity securities granted as compensation and on requirements for disclosure of a company‘s policies on incentive-based compensation and clawback, or recouping, of pay provisions in the event of improper activities, according to the OIRA.