SEC Proposes New Executive Compensation Disclosure Requirements

The Securities and Exchange Commission voted 3-2 yesterday to propose a rule requiring new disclosures concerning companies’ executive compensation. The rule would require a reporting company’s proxy statement and other disclosures to include a table showing actual compensation paid to key executives; the company’s annual total shareholder return, as calculated under SEC Regulation S-K; and the annual total shareholder returns of a peer group of companies.

The reporting company would be required to discuss the relationships among the disclosed compensation numbers, its total shareholder return and the comparable peer group information. The new XBRL-compliant disclosures would be required for the past five fiscal years, or three years for smaller companies, which would also be exempt from the peer group comparison requirement.

All reporting companies would be subject to the new disclosures, except foreign private issuers and certain specialized entities such as mutual funds. The disclosure requirements would apply to the “named executive officers” for whom compensation information is currently required. The comment period closes 60 days after the rule is published in the Federal Register. For more information, contact ABA’s Hu Benton.


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