At the ABA Annual Meeting on Friday, September 15th, the Securities and Exchange Commission (SEC) Division of Corporation Finance Director Bill Hinman (speaking for himself and not the SEC) said that the SEC did not plan to delay the implementation of the CEO pay ratio disclosure rules. Mr. Hinman also mentioned that the SEC anticipates issuing guidance on the pay ratio rule in the near future. We note that although the Financial Choice Act that was passed by the House would repeal the pay ratio rule, the lack of bipartisan support will make it extremely difficult to pass through the Senate on a filibuster-proof vote. Therefore, although it is theoretically possible that Congress could repeal the pay ratio rule, it is highly unlikely that it would pass before the 2018 proxy season.
In light of this development, it is imperative for companies to start developing a process now for identifying their “median employee” in preparation for the 2018 proxy season.
For additional information on preparing for the CEO pay ratio rule, please see our previous blog.