The Securities and Exchange Commission (SEC) is moving forward on rules that will require companies to disclose their CEO-to-worker pay ratio. The rule is mandated under the Dodd-Frank Act.
The proposal toward the SEC would specifically amend existing executive compensation disclosure rules to require companies to disclose:
The median of the annual total compensation of all its employees (excluding the CEO);
The annual total compensation of its CEO; and
The ratio of the two amounts.
In good news for companies, the SEC elected not to devise any particular methodology for making the required calculations. Rather, the proposed rules would allow companies to select a methodology that is appropriate to the size and structure of their own businesses and the way they compensate employees.
Of course, there are several specific requirements. For instance, “all employees” means full-time, part-time, temporary, seasonal and non-U.S. employees as well as those employed by subsidiaries. In addition, companies will be required to disclose the methodology employed, and any material assumptions, adjustments or estimates used to determine the median employee or total CEO compensation.
Companies would only be required to provide the new information in filings that must already include executive compensation information under Item 402 of Regulation S-K, such as registration statements, proxy and information statements, and annual reports. The disclosure requirements would not apply to emerging growth companies, smaller reporting companies, and foreign private issuers.
This provision of Dodd-Frank has proven to be controversial, even before the SEC released its rule proposal. In fact, the SEC has already received over 22,000 comments letters on this aspect of Dodd-Frank. Therefore, it could still be some time before any requirements are implemented.
Nonetheless, given the burden of compiling the required information, companies should stay on top of any new developments. We encourage you to check back to this blog for updates.
If you have any questions about the SEC’s proposed compensation rules or would like to discuss the legal issues involved, please contact me, Kenneth Oh, or the Scarinci Hollenbeck attorney with whom you work.
Scarinci Hollenbeck Expands NYC Real Estate and Litigation Practices ADDING four litigators
NYC Real Estate and Litigation Attorney Ryan O. Miller and Team Join Scarinci Hollenbeck, LLC New York City, NY – August 13, 2025 – Scarinci Hollenbeck, LLC has strengthened its Real Estate and Litigation practices with the addition of four New York City-based attorneys. Ryan Miller, who joins as a partner, is well known for […]
Business law plays a critical role in nearly every aspect of running a successful enterprise, from negotiating a commercial lease to drafting employee policies to fulfilling corporate disclosure obligations. Understanding what is business law and your legal obligations can help your business run smoothly and build productive relationships with clients, business partners, regulators, and others. […]
Corporate Transactions: Best Practices for Successful Deals
Corporate transactions can have significant implications for a corporation and its stakeholders. For deals to be successful, companies must act strategically to maximize value and minimize risk. It is also important to fully understand the legal and financial ramifications of corporate transactions, both in the near and long term. Understanding Corporate Transactions The term “corporate […]
How to Conduct a Fair and Legal Employee Termination in 2025
Ongoing economic uncertainty is forcing many companies to make tough decisions, which includes lowering staff levels. The legal landscape on both the state and federal level also continues to evolve, especially with significant changes to the priorities of the Equal Employment Opportunity Commission (“EEOC”) under the Trump Administration. Terminating an employee is one of the […]
Admin Dissolution for Annual Report: What You Need to Know
While filing annual reports may seem like a nuisance, failing to do so can have significant ramifications. These include fines, reputational harm, and interruption of your business operations. In basic terms, “admin dissolution for annual report” means that a company is dissolved by the government. This happens because it failed to submit its annual report […]
Antitrust laws are designed to ensure that businesses compete fairly. There are three federal antitrust laws that businesses must navigate. These include the Sherman Act, the Federal Trade Commission Act, and the Clayton Act. States also have their own antitrust regimes. These may vary from federal regulations. Understanding antitrust litigation helps businesses navigate these complex […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
