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SEC Adopts Divisive Pay Ratio Rule

Joe Mont | August 5, 2015

After years of anticipation (and no small dose of dread) the Securities and Exchange Commission’s pay ratio rule is now final. The Commission approved the rule on Wednesday with a 3-2 vote, with Republican commissioners Daniel Gallagher and Michael Piwowar unsuccessfully swaying the majority.

The rule, a mandate of the Dodd-Frank Act and requirement to compare CEO compensation to the pay of the median employee, has lingered in the proposed rule stage since 2013. While proponents, many associated with shareholder activists and organized labor, have accused the SEC of foot-dragging, public companies covered by the rule have expressed fears that compliance will be daunting and expensive. A common concern has been the international scope of the rule and how the lack of centralized payroll systems, differences in the cost of living among various countries,...

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