SEC Issues Guidance on Pay Ratio Disclosure
On October 18, 2016, the Securities and Exchange Commission (“SEC”) issued for the first time Compliance and Disclosure Interpretations (“C&DIs”) on the pay ratio disclosure requirement codified in Item 402(u) of Regulation S-K. In five new C&DIs, the SEC provides additional clarity with regard to two key aspects of the pay ratio disclosure requirement:
- The determination of which employees are required to be included in the pay ratio calculation; and
- The identification of the median employee through a “consistently applied compensation measure” (“CACM”).