The US Securities and Exchange Commission has adopted a pay ratio disclosure rule requiring public companies to compare the compensation of their chief executive officer to the median compensation of their other employees. The SEC has provided a relatively long lead time for compliance—i.e., companies will first be required to include pay ratio disclosure in 2018. And, while there may be legislative and legal challenges to the rule, there is a lot that public companies should begin doing in the meantime to prepare, including reviewing their disclosure controls and procedures to take into account the pay ratio disclosure rule.
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