Pay Ratio is a Go: What to Do Now
January 11, 2018
Nearly two and one-half years after its adoption, the new CEO pay ratio disclosure rule goes into effect in 2018. And, in spite of the SEC's efforts to make compliance as flexible as possible, it will still be a challenge. For many companies, developing a process for identifying their "median employee" (whose annual total compensation must be compared to the annual total compensation of your Chief Executive Officer to produce the mandated "pay ratio") will be a major effort Given our global economy, the varied pay arrangements of a worldwide workforce, and many issues that can arise in collecting, integrating, and analyzing compensation data, the time and expense of selecting an appropriate "median employee" can be significant. While the pay ratio rule and related Commission guidance allows significantly flexibility to comply in a manner that best fits your specific facts and circumstances, there are still many issues that must be carefully addressed. Further, drafting the required disclosure, particularly the initial disclosure for 2018, will require careful calibration to ensure that it both corresponds to the disclosure of your peers and sends the appropriate message to your various stakeholders.
Please join Mark A. Borges of Compensia, Inc., Amy Wood of Cooley, LLP and Steve Seelig of Willis Towers Watson for a discussion of the new CEO pay ratio rule, including how companies are going about identifying the median employee and drafting the required disclosure, as well as the following additional topics:
- How to determine your employee population, including the treatment of non-U.S. employees and independent contractors
- How to select an appropriate compensation measure
- Special issues that may arise when determining annual total compensation for your median employee and CEO
- Considerations when drafting your CEO pay ratio disclosure, including whether (and when) to provide additional voluntary disclosure
- Lessons learned from the initial group of companies having to comply with the new rule
- The latest guidance from the SEC on complying with the new rule
- Mark Borges (moderator), Compensia, San Francisco, CA
- Steve Seelig, Willis Towers Watson, Arlington, VA
- Amy Wood, Cooley, San Diego, CA
Presented by: Federal Regulation of Securities Committee
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