Defining Issues | October 2017

SEC adopts interpretive guidance on pay ratio disclosures


SEC Release Nos 33-10415; 34-81673

Division of Corporate Finance Guidance on Calculation of Pay Ratio Disclosure

SEC registrants that are NOT:

  • Smaller reporting companies
  • Emerging growth companies
  • Foreign private issuers
  • Multijurisdictional Disclosure System filers
  • Registered investment companies

Relevant dates

  • Effective for fiscal years beginning on or after January 1, 2017.

Key impacts

The guidance addresses:

  • Reasonable estimates, assumptions and methodologies to prepare the disclosures
  • Determination of the de minimis exemption for non-US employees
  • Determination of the annual compensation used to identify the median employee
  • Determination of what constitutes an employee

The SEC also provides guidance and examples of statistical sampling methodologies and other reasonable methods to calculate the pay ratio disclosure.

Report contents

  • Applicability
  • Key facts and impacts
  • SEC interpretive guidance
  • Division of Corporation Finance’s additional guidance



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