Recorded October 10, 2017
Data Gathering, Calculation Methodologies, Preparing for Heightened Stakeholder Scrutiny
The SEC’s Pay Ratio Disclosure Final Rule under the Dodd-Frank Wall Street Reform and Consumer Protection Act mandates that public companies disclose the total pay of the CEO and median-paid employee and the ratio between the two.
The SEC also published several Compliance & Disclosure Interpretations (CDIs) to provide guidance to companies on designing the methodologies used to calculate their pay ratio.
SEC, corporate and Executive compensation counsel must guide clients in complying with the new rule and understanding its implications, including the definition of “compensation,” statistical sampling and other reasonable measures to identify median employee pay, and calculating the pay ratio.
Counsel must also educate a client company's board of directors on the new rule and potential fallout from the pay ratio disclosure and develop approaches for “unveiling” the disclosure to employees, regulators, unions and other stakeholders.
Our panel will provide guidance to executive compensation, corporate counsel and SEC for preparing clients to comply with the SEC’s new Pay Ratio Disclosure Final Rule, for compensation paid in fiscal years beginning Jan. 1, 2017. Most public companies will need to include this disclosure in their 2018 proxy statements. The panel will discuss practical steps employers should take now to begin calculating compensation for their CEO and median-paid employee, including the use of statistical sampling and other reasonable calculation methodologies.
The panel will review these and other key issues:
- What does the SEC’s Pay Ratio Disclosure Final Rule require?
- What do companies need to disclose?
- How is the median employee determined?
- How should public companies go about determining total compensation for their median employee? What compensation adjustments are allowed?
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