Annual total compensation ratio

Objet de l’information

Disclosure 2-21 requires an organization to report two annual total compensation ratios and the contextual information necessary to understand the data and how it has been compiled.

First, the organization must report the ratio of the annual total compensation of its highest-paid individual to the median annual total compensation of all employees, excluding the highest-paid individual where that individual is part of the employee population.

Second, the organization must report the ratio of the percentage increase in annual total compensation of the highest-paid individual to the median percentage increase in annual total compensation of all employees, excluding the highest-paid individual where applicable. This second ratio is a mandatory element of Disclosure 2-21 and should not be treated as optional.

The highest-paid individual is not necessarily an employee. The numerator should include the individual who received the highest annual total compensation from the organization during the reporting period. The denominator covers all employees reported under Disclosure 2-7 for the entities included in the organization’s sustainability reporting under Disclosure 2-2. Workers who are not employees are not included in the denominator.

Annual total compensation includes salary, bonus, stock awards, option awards, non-equity incentive plan compensation, changes in pension value and nonqualified deferred compensation earnings provided during the year. Depending on the organization’s remuneration policies and data availability, the calculation should consider base salary, total cash compensation and direct compensation, including the fair value of annual long-term incentives.

The organization should use a consistent compensation definition and valuation basis for the highest-paid individual and the employee population. It should explain the treatment of equity awards, deferred remuneration, pension-value changes, benefits, part-time employees, part-year employees and currency translation.

For the second ratio, the organization should distinguish the median of employee-level percentage increases from the percentage change in the median compensation amount. The calculation methodology and treatment of employees without comparable prior-period data should be documented and explained.

The contextual information should state:

1. whether any employees reported under Disclosure 2-7 were excluded;2. whether full-time-equivalent pay rates were used for part-time employees;3. the types of compensation included;4. the title of the highest-paid individual.

Additional context can explain the effects of organizational size, sector, employment strategy, outsourced or part-time work, automation, workforce mix, one-off remuneration, currency volatility, methodology changes and improvements in data collection.

Where the highest-paid individual changes between periods, the organization should not combine the compensation of different role-holders. It should identify the individual with the highest annual total compensation in the current reporting period and explain how the percentage-increase calculation was handled where comparable prior-period compensation was unavailable.

Where the median percentage increase is zero, the second ratio is mathematically undefined. Where percentage changes are negative, the organization should report the underlying changes and explain how the resulting ratio should be interpreted.

The two results should be presented as ratios, for example 20:1 and 2.5:1, rather than as percentages unless a percentage is being shown as an underlying calculation input.

Reasons for omission are permitted for Disclosure 2-21. Where required data are unavailable or incomplete, the organization must identify the affected requirement, specify the missing employee populations or entities, explain why the information is unavailable, and describe the steps and expected time frame for obtaining it in its GRI content index.

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