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SEC Staff Extends Analysis Related to Dodd-Frank Pay Ratio Disclosure Proposal
Practical Law Legal Update 3-617-0631 (Approx. 4 pages)
SEC Staff Extends Analysis Related to Dodd-Frank Pay Ratio Disclosure Proposal
by Practical Law Corporate & Securities
| Published on 02 Jul 2015 • USA (National/Federal) |
The SEC staff extended its June 4, 2015 analysis related to the SEC's September 2013 rule proposal that would implement the "pay ratio" disclosure requirement mandated by Section 953(b) of the Dodd-Frank Act.
On June 30, 2015, the SEC staff issued a memorandum that extends its earlier supplemental analysis related to the September 2013 rule proposal that would implement the "pay ratio" disclosure requirement mandated by Section 953(b) of the Dodd-Frank Act. The earlier supplemental analysis, issued by the SEC's Division of Economic and Risk Analysis on June 4, 2015, considered the potential effects of excluding different percentages of certain categories of employees (such as part-time, seasonal or temporary employees or employees in foreign countries) on the pay ratio calculation.
The June 30 memo, also issued by the Division of Economic and Risk Analysis, extends the earlier supplemental analysis to:
- Include the effects of excluding 25% to 95% of employees, by 5% increments, on the pay ratio calculation. The earlier supplemental analysis showed only the effects of excluding up to 20% of employees, by 1% increments.
- Include the effects of excluding percentages of employees under three intermediate scenarios:
- Scenario I(a), where 75% of the excluded observations are below the median, with the remaining 25% of the excluded observations above the median;
- Scenario I(b), where 50% of the excluded observations are below the median, with the remaining 50% of the excluded observations above the median; and
- Scenario I(c), where 75% of the excluded observations are above the median, with the remaining 25% of the excluded observations below the median.
The earlier supplemental analysis included the effects of excluding percentages of employees under just two scenarios:- Scenario I, where all excluded observations are below the median; and
- Scenario II, where all excluded observations are above the median.
- Present the estimated effects using two decimal places and present a separate figure for each of four standard deviation estimates. The earlier supplemental analysis used only one decimal place and presented only one combined figure for all four standard deviation estimates.
For more details on the pay ratio proposal, see Legal Update, SEC Proposes Dodd-Frank Pay Ratio Disclosure Rules.
For more information on executive compensation disclosure, see Practice Note, Proxy Statements: Executive Compensation. For information on provisions of the Dodd-Frank Act relating to executive compensation, see Practice Note, Summary of the Dodd-Frank Act: Executive Compensation.