In this guidance companies will find:

• the Commission’s views on the use of reasonable estimates, assumptions, and methodologies involved in the statistical sampling permitted by the rule;
• clarification that a company may use appropriate existing internal records, including payroll and tax records, in determinations about the inclusion of non-US employees and in identifying the median employee;
• information regarding when a company may use widely recognized tests to determine whether or not its workers are employees for the purposes of this rule.

Of the issued guidance, SEC Chairman Jay Clayton explained, “It’s our priority to make sure that we implement disclosure rules mandated by Congress in a way that is true to the mandate and, to the extent practicable, allows companies to use operational data and otherwise readily available information to produce the disclosures. Today’s guidance on pay ratio reflects the feedback the SEC has received and encourages companies to use the flexibility incorporated in our prior rulemaking to reduce costs of compliance.”

In addition, the SEC has issued separate guidance about the pay ratio rule. “This additional staff guidance, which includes examples illustrating how reasonable estimates and statistical methodologies may be used, is intended to assist companies with their compliance efforts and reduce costs associated with preparing disclosures,” said Bill Hinman, Director of the Division of Corporation Finance. “We encourage companies to contact the division staff if additional interpretive questions arise as the compliance date approaches.”

These guidance documents can be accessed here and here.

Sources

SEC Adopts Interpretive Guidance on Pay Ratio Rule (sec.gov)
Commission Guidance on Pay Ratio Disclosure (sec.gov)
Division of Corporation Finance Guidance on Calculation of Pay Ratio Disclosure (sec.gov)