SEC Issues Pay Ratio Disclosure Guidance

The staff of the SEC's Division of Corporation Finance (Staff) recently issued guidance on the SEC's pay ratio disclosure rule (Rule)¹ in the form of new compliance and disclosure interpretations.² The Staff's guidance can be found here.

Under the Rule, most companies required to provide compensation disclosure pursuant to Item 402 of Regulation S-K in filings with the SEC³ must disclose in their annual reports, proxy or information statements, and registration statements in which executive compensation disclosure under Item 402 of Regulation S-K is required, (1) the median annual total compensation of all employees, except their principal executive officer (PEO), (2) the PEO's annual total compensation, and (3) the ratio of these two compensation amounts.⁴ Disclosure under the Rule must be made with respect to compensation for fiscal years beginning on or after January 1, 2017. Thus, an issuer with a December 31 fiscal year must first make pay ratio disclosure under