Workforce Data Insight Pitch

II. Rationale for Each Disclosure Item Requested In this section, we describe the rationale for each disclosure metric requested. We recommend that the Commission mandate multiple metrics because investors need multiple data points to assess a firm's human capital; no single metric alone can fully express the value of this asset. The number of people employed by the issuer, broken down by whether those people are full-time, part-time, or contingent workers. 33 The SEC's current headcount requirement has led to inconsistent disclosures. In a 2016 Concept Release soliciting feedback on ways to improve business and financial disclosures required by Regulation S-K, the Commission observed that the headcount data disclosed by companies may vary substantially.34 For example, some companies report the number of full- time and part-time employees overall, while others report headcount by business unit or division. Still others report numbers only for their domestic workforce, and others report information that includes international employees. Inconsistencies with respect to the reporting of contingent labor have persisted despite 2008 SEC staff guidance stating that industries typically reliant on independent contractors should disclose these numbers as well.35 Disclosures made since the 2020 Regulation S-K amendments continue to reflect these same problems.36 Investors have routinely requested that headcount be broken down into full-time, part- time, and contingent workers because this breakdown allows investors to contextualize information about workforce changes.³7 For example, the movement of large number of 33 This would include reporting on all similarly situated persons whose work contributes to a material level of revenue or income. 34 Comments on Concept Release: Business and Financial Disclosure Required by Regulation S-K, Sec. & Exch. Comm'n, Release No. 33-10064; 34-77599; File No. S7-06-16, https://www.sec.gov/comments/s7-06- 16/s70616.htm 35 Regulation S-K, Sec. & Exch. Comm'n (August 25, 2023) https://www.sec.gov/divisions/corpfin/guidance/regs- kinterp See 203.01: "In industries where registrants' general practice is to hire independent contractors (sometimes called "contract employees" or "freelancers") rather than "employees" to perform the work of the company, this disclosure should indicate the number of persons retained as independent contractors, as well as the number of regular employees.") For example, investors only discovered Alphabet/Google employed roughly the same number of contractors as direct hires when an employee leaked workforce composition information in the midst of labor controversies at the firm in 2018 (Mark Bergen and Josh Eidelson, Inside Google's Shadow Workforce, BLOOMBERG (July 25, 2018) https://www.bloomberg.com/news/articles/2018-07-25/inside-google-s-shadow- workforce#xj4y7vzkg). Interestingly, Google perhaps could have reported on the number of these employees as the company already had a category for them: "TVCs" ("temps, vendors, and contractors"). 36 See, e.g., https://corpgov.law.harvard.edu/2020/12/13/variety-of-approaches-to-new-human-capital-resources- disclosure-in-10-k-filings/, https://www.intelligize.com/intelligize-report-companies-avoid-revealing-human-capital- metrics/, https://papers.ssrn.com/so13/papers.cfm?abstract_id=4138543. 37 Email to the Secretary, Sec. & Exch. Comm'n from the Committee on Securities Law of the Business Law Section of the Maryland State Bar Association (July 21, 2016), https://www.sec.gov/comments/s7-06-16/s70616- 257.pdf INVESTOR ADVISORY COMMITTEE 9

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