Insights
Alert
David Gordon
Managing Director, Los Angeles, CA
Samantha Nussbaum
Principal, Los Angeles, CA
SEC Releases Helpful Guidance with Respect to Application of New Pay Ratio Rule
Alert | By David Gordon, Samantha Nussbaum
On October 18, the SEC issued guidance in the form of new Compliance and Disclosure Interpretations (CDIs) that may significantly simplify the application of the new pay ratio disclosure rule. The pay ratio rule was enacted by the Dodd-Frank Act and generally applies to proxy statements issued in 2018. The rule requires a registrant to compute the ratio of the CEO’s pay to that of the median employee and presents a number of technical issues with respect to correctly computing the ratio in a way that is not overly burdensome. The new CDIs contain additional guidance with regard to (1) the treatment of furloughed employees (2) when compensation can be computed using a method different than that used to compute the compensation reported in the Summary Compensation Table (SCT), (3) permissible time periods over which compensation can be measured, and (4) treatment of independent contractors and leased employees.
David GordonManaging Director
Dave Gordon’s practice as an executive compensation consultant stretches back over a decade. He has covered a variety of industries, including extensive experience with financial institutions and utilities. In addition to engagements for his own clients.
Samantha Nussbaum
Principal
Samantha Nussbaum has consulted on behalf of public and private companies, compensation committees, and senior management on all aspects of executive compensation. Samantha’s consulting and legal background includes advising on executive compensation in the context of mergers and acquisitions, spin-offs, and initial public offerings; executive employment, severance, and change in control agreements; equity incentive plans; deferred compensation; and securities laws, including reporting and disclosure implications.