On September 21, 2017, the Securities and Exchange Commission (the “SEC”) adopted interpretive guidance regarding Item 402(u) of Regulation S-K, which governs pay ratio disclosure. The interpretive guidance is intended to provide assistance to companies choosing to use statistical sampling in determining their median employee. In the interpretive guidance, the SEC indicated that it would not pursue enforcement actions against companies that use reasonable estimates, assumptions or methodologies, unless the related disclosures were made without a reasonable basis or provided other than in good faith. The interpretive guidance also clarifies how companies can use internal records to identify the median employee. In addition, the SEC’s staff also released guidance in using statistical sampling and other reasonable methodologies. Finally, the SEC staff revised its Compliance and Disclosure Interpretations to conform prior guidance to the aforementioned interpretive guidance and to permit companies to refer to its pay ratio as a reasonable estimate.

Please visit our initial post on this topic.

*          *          *

Please feel free to contact any member of the Proskauer Employee Benefits & Executive Compensation Group or the Capital Markets Group with any questions about this post.