SEC clarifies executive pay ratio guidelines

The Securities and Exchange Commission has unveiled guidelines for a pay ratio disclosure rule under the Dodd-Frank Act, which requires publicly traded companies to calculate pay ratios that compare executive compensation to the median compensation of all other employees, according to the Wall Street Journal.

The rule, which was adopted in August 2015, requires companies to disclose the pay ratio in registration, proxy and information statements as well as in annual reports in their first fiscal year beginning on or after Jan. 1, 2017.

In an update issued Oct. 18, the SEC clarified part of the rule. The commission said a company's worker count should be done within the last three months of its fiscal year, and the count should only include employees whose compensation is determined by the company or its subsidiaries, according to WSJ.

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