Additional SEC Guidance On Pay Ratio Disclosure

As issuers prepare for the pay ratio disclosures that will be required with respect to fiscal years beginning on or after January 1, 2017, the Division of Corporation Finance issued new Compliance & Disclosure Interpretations ("C&DIs") on October 18, 2016 that provide additional guidance on this topic. The C&DIs focus primarily on the use of a "consistently applied compensation measure" ("CACM") to identify the median annual compensation of all employees except the chief executive officer.

As a reminder, the "pay ratio rule" will require public companies (other than smaller reporting companies, foreign private issuers, emerging growth companies and registered investment companies) to disclose the ratio of annual total compensation of the CEO to the median of the annual total compensation of the company's employees. (See Foley Hoag Securities Alert:  SEC Adopts Pay Ratio Disclosure Rule.) Issuers have some discretion in their method of determining their