Pay Ratio Disclosure: A Final SEC Rule Laden with Controversy

Allan B. Afterman, PhD, CPA

In August 2015, the SEC, by the narrowest of margins (3 votes for, 2 against), adopted the long-awaited and politically charged rule requiring large U.S. public companies to disclose the ratio of their CEOs' annual compensation to that of their median-compensated employees. The rule, often referred to as the “pay ratio rule,” implements section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 by amending Item 402 of Regulation S-K, Executive Compensation.