Bass, Berry & Sims attorney Tatjana Paterno provided insight about the SEC’s newly adopted CEO pay ratio rule and the potential consequences that will arise from its adoption. The article outlines the new requirements that will go into effect at the start of 2017. In the article, Tatjana answers the following questions related to the new rule:
- Can you provide a summary of the SEC’s Pay Ratio rules, their deadlines and what they really mean for boards of directors, investors and employees?
- What is “the median” employee and how will companies identify them?
- How much flexibility is there in calculating the pay ratio and explaining it to investors?
- What sort of costs might companies expect?
- What can shareholders expect to learn from the pay ratio rules and how should they interpret the numbers that will be reported?
Tatjana further explains that the rule may have some unintended consequences as pay ratios will be publicly available, and employees will be able to compare how their compensations measure against that of other employees. This transparency could result in workers asking for higher wages and job applicants using the available information to their advantage when negotiating starting salaries or wages.
The full article, “A Primer on Pending CEO Pay Ratio Rule,” was published by the Nashville Post on November 13, 2015 and is available online.