SEC Issues C&DIs on CEO Pay Ratio Disclosure, Exempt Offerings Under Rule 701 and Sales of Securities Under Rule 144(d)

November 04, 2016

The U.S. Securities and Exchange Commission (the “Commission”) issued five Compliance and Disclosure Interpretations (“C&DIs”) on October 18, 2016, addressing certain aspects regarding the CEO pay ratio disclosure rules, as set forth in Item 402(u) of Regulation S-K. The C&DIs covered two main topics: (i) the use of a consistently applied compensation measure in identifying a company’s median employee; and (ii) the application of the term “employee” to furloughed employees and independent contractors or “leased” workers. The new pay ratio disclosure C&DIs are discussed in detail below under the heading “Guidance on CEO Pay Ratio Disclosure.”

On October 19, 2016, the Commission issued one new C&DI and two revised C&DIs relating to the Securities Act of 1933, as amended (the “Securities Act”). The new C&DI and one of the revised C&DIs relate to exempt offerings and sales of securities pursuant to Rule 701 and the other revised C&DI relates to the holding period for restricted securities under Rule 144(d). These C&DIs are discussed in detail below under the heading “Guidance on Exempt Offerings under Rule 701 and Sales of Securities under Rule 144(d).”

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