Under the rules of the US Securities and Exchange Commission (SEC), companies will be required to include pay ratio disclosure in their proxy statements with respect to compensation for their first full fiscal year that begins on or after January 1, 2017. Therefore, companies generally will first be required to include pay ratio disclosure in their 2018 proxy statements. On October 18, 2016, the staff of the Division of Corporation Finance of the SEC issued five new compliance and disclosure interpretations (C&DIs) providing guidance on the methodology for applying compensation measures and determining the employee population to identify the median employee. This Legal Update summarizes these C&DIs and comments on related practical considerations for companies.
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