The Securities and Exchange Commission issued its first guidelines for calculating pay ratios that compare executive compensation to that of the company’s median employee.

Companies are required to report this information in their proxy, registration and information statements, as well as annual reports for the first fiscal year beginning January 1, 2017. The rule is mandated by the Dodd-Frank law and was adopted in August 2015.

The SEC, in an update on compliance and disclosure interpretations on Oct. 18, said companies must pick a date within the last three months of their fiscal year on which to assess their employee population. The worker count should include employees whose compensation the company or its subsidiaries determine, but exclude contract workers from unaffiliated third parties. Read More