Popular Topics
All Topics
- "Gun Jumping"
- "Test-the-Waters" communications
- 2016 SEC Agenda
- ABL
- Accelerated Filer
- Accelerated filers
- Access to Capital and Market Liquidity Report
- Accounting
- Accredited investor
- Advance Notice Bylaws
- Airbnb
- Alternative Trading Systems
- Annual meeting
- Annual reports
- ASC Topic 740
- Asset Management
- asset-based loan
- ATS
- Auction IPOs
- Audit committee
- Auditor attestation
- Authentication document
- BlackRock
- Blank-check companies
- Blockchain
- blue sky
- Board committees
- Board Diversity
- Board independence
- Board of Directors
- Boilerplate
- Boilerplate in securities documents
- borrower
- Broker-dealer
- Broker-dealer registration
- Broker-dealers
- Calculation of Registration Fee
- California
- California Assembly Bill 979
- Capital formation
- capital markets
- Capital raising
- CEO letters
- Certified B corporation
- Chair Mary Jo White
- Chairman’s letters
- Chairperson’s letters
- Climate Change
- coal companies
- coal company IPOs
- coal miners
- coal mining
- collateral
- Columbia Law School
- Commencement of an offering
- Compensation sharing
- Compensatory offerings
- Compensatory sales
- Compensatory securities
- Compensatory securities offerings and sales
- Compliance and Disclosure Interpretation 110.02
- conditions precedent
- conference
- Confidential filings
- Confidential information
- Confidential treatment
- Confidentiality agreements
- coronavirus
- Corporate Governance
- Corporate Law
- Corporate social responsibility
- Corporate social responsibility: CSR
- Corporate Stock-Givaway Program
- covenants
- COVID-19
- credit agreement
- Crowdfunding
- CSR
- Cyber breach
- cyber incident
- Cyber risk
- Cyber-attack
- cybersecurity
- DAO
- December 31 Fiscal year end
- Decimalization
- Definition of a Security
- Delaware corporate law
- Delaware Law
- Delaying amendment
- Description of Business
- Designer stock
- Digital Advertising
- Digital securities
- Direct listings
- Direct marketing programs
- Direct response marketing
- Director Nominees
- Director Questionnaire
- Directors
- Disclosure
- Disclosure and Reporting
- Disclosure Effectiveness Initiative
- Disclosure Obligations
- Disclosure Regime
- Disclosure regulation
- Disclosure Requirements
- Disclosure Rules
- Disclosure simplification
- Disclosure updates and simplification release
- Diversity
- Dodd Frank
- Dodd-Frank Act
- Domino's Piece of the Pie Rewards
- Domino's Pizza
- Donald Trump
- Dual Class Shares
- Dual-class Capitalization
- Dual-Class Common Stock
- Dual-class shareholder voting
- Due diligence
- earnings guidance
- Economic Growth, Regulatory Relief, and Consumer Protection Act
- EDGAR Filing Manual
- EGC
- Electronic signatures
- Emerging growth companies
- Emerging Growth Company
- engagement letter
- environment, social and governance
- Equity Market Structure
- ESG
- event of default
- events of default
- Exchange Act
- Exchange Act Rule 12b-2
- Exchange listing
- Exchanges
- executive compensation
- Exempt offerings
- Exempt securities offerings
- Exhibits to Registration Statement
- FAST Act
- FDA
- Female
- Fictitious regulators
- Filing review comments
- financial forecasts
- Financial intermediaries
- Financial sophistication
- Financial statements
- Financing Alternatives
- Finders
- Finders exception
- Finders exemption
- FINRA
- First-day pop
- Five-factor test
- Form 10-K
- Form 10-Q
- Form D
- Form S-1
- Form S-3
- Form S-4
- Founder’s letters
- Fraudulent activities
- Free Stock
- Free Stock Offerings
- FTC
- General Motors Co.
- General solicitation
- Glass Lewis
- Golden Leashes
- Greenlight Capital, Inc.
- Hart-Scott-Rodino
- HSR Act
- Impersonators of genuine firms
- Incorporation by reference
- Indications of Interest
- Influencer Marketing
- Information asymmetry
- Initial coin offering
- Initial listing requirements
- Initial public offerings
- Insider Trading
- Integration
- interest
- Interest rate system
- Interest rates
- Intrastate offerings
- Investment banking
- Investment Company Act
- Investor Advisory Committee
- Investor Alert
- IPO
- IPO disclosure
- IPO drawbacks
- IPO pricing
- IPOs
- ISS
- Item 101
- Item 103
- Item 103 of Regulation S-K
- Item 105
- Item 401 of Regulation S-K
- Item 501(b)(7)
- Item 601(b)(24) of Regulation S-K
- James Mackintosh
- JOBS Act
- Ken Langone
- Large Accelerated Filer
- Larry Fink’s 2019 letter to CEOs
- Legal proceedings
- lender
- LGBTQ+
- LIBOR
- line of credit
- loan agreement
- Loan Agreements
- Loan transactions
- Loans
- Loyalty Programs
- Lyft, Inc.
- MAE
- Management
- management disclosure and analysis
- Management; Executive officers and directors
- Mark Cuban
- Material contract exhibits
- Material nonpublic information
- MD&A
- Mergers & Acquisitions
- Modernization
- Multi-Class Shares
- NASDAQ
- Nasdaq Independence Rules
- Nasdaq Listing Rules
- Nomination Letter
- Non-accelerated Filer
- Non-GAAP Financial Measures
- NSMIA
- NYSE
- Offering fees
- Offering statement on Form 1-A
- Offering statement on Form C
- Ordinary Course Covenant
- OTC
- OTC Market Group
- OTC Pink
- OTC quoted companies
- OTCQB
- Paid-for Research
- pandemic
- Pay Ratio Disclosure
- Pay Ratio Rule
- perfection certificate
- Periodic reports
- Perpetual dual-class stock
- Power of Attorney
- Prescriptive-based disclosure
- Primary issuances
- Principal Executive Offices
- Principles-based disclosure
- Private Equity
- Private fund knowledgeable employees
- Private placements
- Prof. John C. Coffee, Jr.
- Proposed Rule 5605(f)
- Prospectuses
- proxy advisory firms
- Proxy Contests
- Proxy fights
- Proxy materials
- Proxy statement
- Proxy voting
- Public benefit corporation
- Public Companies
- Public company acquisitions
- Public Float
- Public M&A
- Public offerings
- Purpose & Profit
- Purpose of the corporation
- Qualified institutional buyer
- Reference interest rates
- Reg S-K
- Registered offerings
- Registration Filing Fee
- Registration statement
- Registration statements
- Regulation A activity
- Regulation A+
- Regulation Crowdfunding
- Regulation D
- Regulation FD
- Regulation of finders
- Regulation S
- Regulation S-K
- Regulation S-K Item 10(f)(1)
- Regulation S-T
- Regulations S-K
- Regulatory Entrepreneurship
- Release No. 34-90112
- Reporting Category
- representations
- resource extraction antigraft rule
- restricted stock
- Reverse mergers
- revolver
- Rights offerings
- Risk Factors
- Rule 10b-5
- Rule 10b5-1 plan
- Rule 144A
- Rule 14a-4
- Rule 163B under the Securities Act of 1933
- Rule 21F-17
- Rule 24b-2 under the Securities Exchange Act of 1934
- Rule 253(f)
- Rule 302(b)
- Rule 4(a)(2) offering
- Rule 406 under the Securities Act of 1933
- Rule 473 under the Securities Act of 1933
- Rule 483 under the Securities Act of 1933
- Rule 506(b)
- Rule 506(c)
- Rule 701
- S&P Dow Jones
- Safe Harbor
- SAFEs
- Sarbanes-Oxley Act §404(b)
- Say-on-Pay Frequency Vote
- SEC
- SEC approval of offerings
- SEC Comments
- SEC Commissioner Robert J. Jackson Jr.
- SEC disclosure
- SEC disgorgement
- SEC Division of Economics and Risk Analysis
- SEC Filing Deadlines
- SEC Filing Reviews
- SEC Form 10
- SEC Office of Investor Education and Advocacy
- SEC Release No. 33-10591
- SEC Report of Investigation
- SEC Rule 152
- SEC shutdown
- Section 11(a) of the Securities Act of 1933
- Section 21F
- Section 8(a) of the Securities Act of 1933
- securities
- Securities & Exchange Commission
- Securities Act
- Securities Act of 1933
- Securities Act Rule 257
- Securities Act Rule 405
- Securities Act Section 17(b)
- Securities Exchange Act
- Securities Exchange Act of 1934
- Securities litigation
- Securities offerings
- securities transactions
- Severance Agreements
- Sexual harassment
- Sexual misconduct
- Shareholder Activism
- shareholder activists
- Shareholder nominations
- Shareholder rights
- Shareholder voting
- Shareholder Voting Rights
- Signatures in Registration Statement
- Simple Agreement for Future Equity
- Small business
- Small-cap
- Small-cap Companies
- Small-cap Issuers
- Smaller reporting companies
- Smaller reporting company
- Snap IPO
- Social Capital Hedosophia
- Social Media
- Social Media Marketing
- SOFR
- SPAC
- SPAC's
- Special Purpose Acquisition Company
- Special situations
- Spin-offs
- Sponsorship
- Spotify
- SRC
- Staff Accounting Bulletin (SAB) No. 118
- Staleness date
- Startups
- State securities laws
- stock options
- Stock Ownership Guidelines
- Stock Promotion Schemes
- Strategic spin-offs
- Sunset provisions
- Supreme Court
- Sustainability
- Switch, Inc.
- T+2
- Targeted stocks
- Tax Cuts and Jobs Act
- Tech IPOs
- Tech M&A
- Tech unicorns
- term loan
- term sheet
- Termination or Completion of an offering
- The CLS Blue Sky Blog
- The Wall Street Journal
- Third Party Payments
- Tick Pilot
- Tick Size
- Tick Size Pilot Program
- Tick Sizes
- Token sales
- Tracking stocks
- Trade Settlement
- Trading
- trading platforms
- Transaction-based compensation
- U.S. dollar LIBOR
- U.S. federal income tax reform
- Uber Technologies, Inc.
- Underrepresented Minority
- Underwriting allocations
- Underwriting fees
- Undisclosed Fees
- Unequal Voting Rights
- Universal proxy ballots
- Unregistered finders
- Unregistered offerings
- Unregistered Soliciting Entities
- Uplisting
- US Supreme Court
- Use of boilerplate
- venture capital
- venture capital investors
- venture capital terms
- Venture exchanges
- Verification of accredited status
- Virtual currency
- voting control
- voting power
- warranties
- Whistleblower Program
- Whistleblowers
- “Tandy” Representations
- “Testing the Waters”
Recent Posts
- Leadership Change at the SEC: What Activists Could Expect from Gary Gensler and the Biden Administration
- Delaware Chancery Court Provides Important Guidance on COVID-19’s Impact on a Buyer’s Obligation to Close:
- New York State Updates State Securities Regulations
- Nasdaq Proposes New Listing Rules Related to Board Diversity
- SEC Adopts Amendments to Permit the Use of Electronic Signatures for SEC Filings
- The SEC Rebuilds the Integration Principles Guiding Concurrent Private and Public Offerings of Securities
- The SEC Proposes a Safe Harbor for Permissible Capital-Raising Activities by Unregistered Finders
- SEC Issues 100th Whistleblower Award Just Days after Adopting Amendments to Whistleblower Program
- SEC Reduces Registration Filing Fee Beginning in October 2020
- The SEC Amends Regulation S-K Disclosure Rules to Empower Companies to Determine What and How Much Disclosure is Appropriate for Shareholders and Investors
Archives
- January 2021
- December 2020
- November 2020
- October 2020
- September 2020
- August 2020
- July 2020
- June 2020
- May 2020
- April 2020
Contact Us
(212) 451-2300
www.olshanlaw.com
Time to Get Ready for Pay Ratio Disclosure
SEC issues guidance on “pay ratio” rules compliance.
In preparing proxy statements for their 2018 annual stockholder meetings, most public companies will be required to include CEO pay ratio disclosure. In order to assist companies in their efforts to comply with these new rules and reduce the costs associated with preparing such disclosure, on Thursday, September 21, 2017, the Securities and Exchange Commission approved interpretive guidance. The new pay ratio disclosure rules, which were mandated by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, will require public companies to calculate and disclose the following items:
- The median of the annual total compensation of all employees of a company, other than its chief executive officer (“CEO”);
- The annual total compensation of the company’s CEO; and
- The ratio of the annual total compensation of the company’s “median employee” to the CEO’s annual total compensation.
In performing the pay ratio calculation, a company is generally required to include all U.S. and non-U.S. employees of the company and its consolidated subsidiaries (including part-time, seasonal and temporary employees), determined as of a date chosen by the company within the last three months of its most recently completed fiscal year (which date must be disclosed).
The interpretive guidance offers the SEC’s views on the use of reasonable estimates, assumptions and methodologies, and statistical sampling in order to identify the median employee and calculate the median employee’s annual total compensation. Acknowledging that the use of estimates, assumptions and statistical sampling may involve a degree of imprecision, the SEC stated that “if a registrant uses reasonable estimates, assumptions or methodologies, the pay ratio and related disclosure that results from such use would not provide the basis for Commission enforcement action unless the disclosure was made or reaffirmed without a reasonable basis or was provided other than in good faith.”
The interpretive guidance also clarified that a registrant is permitted to use existing internal records, such as tax or payroll records, in identifying its median employee, even if such records do not include every element of compensation. Such internal records may also be used for purposes of determining whether non-U.S. employees need to be included for purposes of calculating the median of the annual total compensation of all of its employees. Under the pay ratio rules, companies are generally permitted to exempt non-U.S. employees where these employees account for 5% or less of the company’s total U.S. and non-U.S. employees.
In addition, the SEC also stated in the interpretive guidance that companies may use widely recognized tests, such as guidance published by the Internal Revenue Service, to determine whether its workers are employees or independent contractors for purposes of the pay ratio disclosure rules.
The SEC separately published guidance about the use of statistical sampling to assist companies in determining their median employee for pay ratio disclosure purposes. The additional guidance includes hypothetical examples of the use of sampling and other reasonable methodologies.
In issuing this interpretive guidance, the SEC confirmed that the schedule for compliance with the pay ratio disclosure rules remains in effect. There had been some speculation earlier this year that the rule may be repealed or delayed when then acting chairman Michael Piwowar ordered the SEC to reconsider implementing the rule. In June 2017, the U.S. House of Representatives passed the Financial CHOICE Act, which included a provision for the repeal of Section 953(b) of the Dodd-Frank Act. However, such proposed legislation has not been passed by the Senate. In addition, even if the Financial CHOICE Act is enacted, it is not certain that such legislation would repeal the pay ratio rule . Accordingly, companies should continue to prepare to make such pay ratio disclosure in their 2018 proxy statements.
Companies must make the pay ratio disclosure in any registration statement, proxy or information statement, and annual report in which they are required to include the executive compensation disclosure under Item 402 of Regulation S-K. A company does not need to update its disclosure for its most recently completed fiscal year until it files its proxy or information statement for its next annual meeting of stockholders, but no later than 120 days after the end of the fiscal year.
Companies are required to include the pay ratio disclosure with respect to their first fiscal year beginning on or after January 1, 2017. Therefore, as a general rule, for calendar year registrants, the pay ratio disclosure initially would be made in connection with the proxy statement for their 2018 annual meetings.
Companies that become subject to the reporting requirements of the Securities Exchange Act of 1934 must comply with this rule with respect to the following fiscal year. Thus, a calendar year company that first becomes a reporting company in 2017 may omit the pay ratio disclosure until its proxy statement for its 2019 annual meeting.
Smaller reporting companies, emerging growth companies, foreign private issuers, MJDS filers, and registered investment companies are not subject to the pay ratio disclosure rules.