Human Capital: Addressing the New Disclosure Requirement
One of the problems with adopting a principles based disclosure requirement is that you often end up with some poor soul staring at a blank sheet of paper trying to come up with something to say. If you’re worried about finding yourself in that position, a Freshfields blog provides some advice about how to address the SEC’s new human capital disclosure requirement. This excerpt lays out some potential disclosure topics:
– Diversity and inclusion: Programs or initiatives related to recruitment and retention of diverse candidates and other corporate partners, programs or initiatives to mentor and ensure equal opportunities at the company for diverse employees, unconscious bias trainings, and community involvement. For instance, if a company has adopted the Rooney Rule for directors or other positions, it could be helpful to provide that disclosure.
– Workforce compensation and pay equity: Company-wide compensation program design and implementation more generally, including incentive structures, internal minimum rates of pay, as well as efforts to promote gender and diversity pay equity. This may include involvement of outside compensation advisors or use of benchmarking data. This coming year, we expect to see disclosures around changes made to compensation programs in response to COVID-19 and the considerations that were involved.
In the case of companies that had to reduce compensation or furlough employees, we expect to see disclosure of actions taken to ease departures or reduced wages that demonstrate a commitment to the workforce. For example, many companies provided severance packages, extended health insurance to part-time employees or furloughed employees, offered paid sick leave, or established wellness initiatives and mental health services.
– Talent acquisition and retention: Competitive trends affecting recruitment and retention of employees (including, if material, voluntary and involuntary turnover rates), trends in overall workforce composition and talent needs, and succession planning for senior leadership roles.
Other potential topics include employee engagement and wellness, development and training, company culture, and oversight and governance. If you’re looking for more insights into the new human capital disclosure requirement, we’re posting memos in our “Human Capital Management” & “Regulation S-K” Practice Areas.
-John Jenkins, TheCorporateCounsel.net October 23, 2020
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