General: The SEC recently released final pay ratio rules, which can be found here. As a new Item 402(u) of Regulation S-K, these rules codify the Dodd-Frank requirement for companies to disclose:
- The median annual total compensation of all employees, excluding the Principal Executive Officer (“PEO”),
- The annual total compensation of the PEO, and
- The ratio of (i) and (ii).
The rules provide that this pay ratio must be expressed in a way that uses the median compensation as a base factor (i.e. 10 to 1, 10:1 or “the PEO compensation is ten times the median compensation”).