Key takeaways: 

• The human capital management disclosure rule, Item 101(c)(2)(ii) of Regulation S-K, requires public companies to describe, to the extent material to an understanding of the issuer’s business taken as a whole, any human capital measures or objectives that the issuer focuses on in managing the business, such as measures or objectives that address the development, attraction and retention of personnel. In this rule’s first year in effect, issuers have taken a variety of approaches to the disclosure, including with respect to the types of topics covered, the length and depth of the disclosure and whether specific metrics are disclosed.
• As issuers prepare for the 2022 reporting season, we want to remind issuers of what is required to be disclosed under the rule—specifically, those measures or objectives that are a focus of the issuer in managing the business and that are material to an understanding of the issuer’s business taken as a whole.  In considering whether to disclose more than what is required to be disclosed, issuers should be cognizant that disclosure decisions made now may create investor and SEC expectations as to what the issuer will disclose annually on a going-forward basis.  In addition, issuers should be aware that changes made to human capital metrics disclosed in prior years may require additional prominent disclosure regarding the changes to those metrics and underlying definitions.
• Of course, some of these disclosure considerations could be preempted by more prescriptive human capital disclosure requirements that may be proposed by the SEC in the imminent future.  As previewed in statements made by SEC Chair Gary Gensler, these new rules may require mandatory disclosure of specified metrics, including workforce turnover, skills and development training, compensation, benefits, workforce demographics including diversity, and health and safety.