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SEC’s controversial pay ratio rule still alive and problematic

Joe Mont | September 12, 2017

Contrary to rumor and wishful thinking, the Securities and Exchange Commission’s pay-ratio rule probably won’t meet its demise any time soon.

The upcoming 2018 proxy season is the first time companies will have to comply with the rule requiring that companies disclose, in their proxy statements, a calculated ratio comparing the pay of their median employee to that of the annual compensation of the CEO.

Critics have pushed back against the rule on both conceptual grounds—viewing the data demand as part of a name-and-shame campaign by unions, media, and activists—and logistical ones, especially for multinationals facing cost of living and pay differentials in low-income countries, various inflation rates, and currency fluctuations.

The rule has had a target on its back since Day One, even more so with the election of President Trump, who has urged repeal as part of his deregulatory efforts.

In February, while serving as the SEC’s acting chairman,... To get the full story, subscribe now.