Pay Ratio Disclosure Location?
I know most of us would rather put this straight in the trash can but, due to the requirements of Section 953(b) of the Dodd-Frank Act and Item 402(u) of Reg S-K, pay ratio disclosure will need to be part of your 2018 proxy statement. The SEC has not provided specific guidance as to the exact location of this disclosure in your proxy. To date, about 50% of companies have furnished this information in the CD&A, with the remainder placing it elsewhere in the document. As the ratio is most likely not part of the compensation discussion, it’s fair to argue that this should not reside in the CD&A. In fact, as more companies file, it is likely that this data will less often reside in this section. Depending upon the company culture, document structure and final ratio relative to peers, perhaps the best place for this disclosure is in the proxy summary. Or toward the end of the document, after the awards table? Or just before the FAQ section toward the back of your proxy?
Regardless of where it’s included, it cannot be hidden. And keep in the mind, the real focus should be on the language itself as well as understanding who your audience is and how they will likely use this information.