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New C&DIs Address Pay Ratio Disclosure Rule

Clarifying guidance for pay ratio disclosures, the Securities and Exchange Commission’s Division of Corporate Finance has updated its Compliance and Disclosure Interpretations (“C&DI”): Regulation S-K. The new C&DIs address Release No. 33-9877, Pay Ratio Disclosure, which calls for public companies to disclose the ratio comparing the chief executive officer’s salary with the median pay of a company’s employees. Questions answered in the C&DIs concern the calculation of the median employee compensation, as well as how companies should handle furloughed employees and independent contractors.

Public companies will be required to comply with the new pay ratio disclosure requirements in 2018.

More on the updated C&DIs is available on SEC.gov.

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