The Securities and Exchange Commission (SEC) has proposed new legislation that would require public employers to disclose the ratio of the compensation of its chief executive officer to the median compensation of its employees.
The legislation would not prescribe a specific methodology for employers to use in calculating a pay ratio. Instead, companies would have the flexibility to determine the median annual total compensation of its employees in a way that best suits its particular circumstances.
The proposal will be open to a 60-day public consultation period once it is published in the Federal Register.
Mary Jo White, chair of the SEC, said: “This proposal would provide companies significant flexibility in complying with the disclosure requirement while still fulfilling the statutory mandate.
“We are very interested in receiving comments on the proposed approach and the flexibility it affords.”