Issue link: https://digital.shearman.com/i/1035494
Shearman & Sterling LLP 12 | CEO Pay Ratio: Perspectives on the First Year and A Look Forward Only 25 of the S&P 500 companies surveyed used statistical sampling in determining their median employee. Only five of the S&P 500 companies surveyed disclosed that they made cost-of-living adjustments. 187 of the S&P 500 companies surveyed disclosed that they annualized the salaries or wages of their full- or part-time employees in connection with the determination of their median employee. 80 of the S&P 500 companies surveyed adjusted the compensation of the median employee (and that of the CEO) by including items such as health, welfare or retirement benefits or medical, dental, disability and life insurance premiums. None of the S&P 500 companies surveyed used the data privacy exception. 160 of the S&P 500 companies surveyed used the de minimis exception, which allows a company to exclude non-U.S. employees so long as they constitute less than 5% of total employees. Approximately 68 companies, or 46%, of the S&P 500 companies surveyed that used the de minimis exception excluded more than 4% of their workforce. Companies excluded employees from greater than 180 different countries. Of the eight companies that excluded more than 10,000 employees, 53 was the median number of countries from which employees were excluded. 53 of the S&P 500 companies surveyed excluded employees from businesses acquired in the past year. The number of employees excluded pursuant to this exception ranged from 16 to 12,000. Statistical Sampling Cost-of-Living Adjustments (COLA) Annualization of Employee Salaries Adjustments to the Compensation of the Median Employee Data Privacy Exception De Minimis Exception Acquisition Exception 6% 46% 0% 40% 13% 20% 1% $ A significant majority of companies used their fiscal year end as their measurement date for purposes of determining the median employee. The next most commonly used date was the first day of the third-to-last month of their fiscal year. Median Employee Measurement Date December 31, 2017 Any other day in December 2017 Any day in November 2017 October 1, 2017 Any other day in October 2017 No date disclosed 195 25 95 46 8 31