Q&A with Corp Fin: Pay Ratio

Yesterday the SEC released Compliance & Disclosure Interpretations (“C&DIs”) on Regulation S-K. Below we have highlighted the Q&A about the pay ratio disclosure.

Section 128C — Item 402(u) Pay Ratio Disclosure

Question 128C.01

Question: If a registrant does not use annual total compensation calculated using Item 402(c)(2)(x) of Regulation S-K (“annual total compensation”) to identify the median employee, how should a registrant select another consistently applied compensation measure (“CACM”) to identify the median employee?

Answer: Item 402(u) requires registrants to identify the median employee using annual total compensation or another CACM, such as information derived from the registrant’s tax and/or payroll records. Because of concerns about the expected compliance costs if registrants had been required to calculate annual total compensation for all employees, the Commission permitted registrants to use a CACM other than annual total compensation as a reasonable alternative to identifying the median employee. Any measure that reasonably reflects the annual compensation of employees could serve as a CACM.

Continue reading the response and remaining questions, here.

By |2019-03-05T09:41:44-05:00October 19th, 2016|Categories: News Watch|Tags: |Comments Off on Q&A with Corp Fin: Pay Ratio
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