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Client Alert: Preparing for the New Pay Ratio Disclosure Rules

A Few Things You Need to Know

Action Item

New "pay ratio disclosure rules" require a public company to disclose the ratio of the annual total compensation of its CEO to the median of the annual total compensation of all employees, except the CEO. Prepare accordingly with the tips below.

Pay Ratio Rules

On August 5, 2015, the Securities and Exchange Commission adopted final rules implementing the "pay ratio disclosure rules," which require a public company to disclose the ratio of the annual total compensation of its chief executive officer to the median compensation of its employees.

Note that the pay ratio rules become effective for a company's first fiscal year beginning on or after January 1, 2017, so the first pay ratio disclosure will likely be in a company's 2018 proxy statement.

Tips to Prepare

Applicability

Determination of Employee Population

Selection of Median Employee

Calculation of Compensation

Disclosure of Pay Ratio

We Can Help

This is a summary only, and we will provide a more detailed description of the adopted pay ratio rules in our 2016 Annual Meeting and Securities Update.

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