SEC adopts new reporting requirements for executive compensation

The Securities and Exchange Commission today adopted new requirements for company disclosures concerning executive compensation. Among the changes is a new requirement that a reporting company’s proxy statement and other disclosures include a table showing executive compensation and financial performance measures. Companies also must provide the annual total shareholder return and the annual total shareholder returns of a peer group of companies.

The SEC originally proposed the rule in 2015. It was never finalized, but the agency reopened comment earlier this year. Under the new rule, large companies would be required to disclose details on executive compensation for the past five fiscal years while small companies need to report on the past three fiscal years. Small companies would be exempt from disclosing details on pensions and peer groups. They also are exempt from new language requiring companies to list the three to seven most important measures linking executive compensation to company performance. Emerging growth companies, registered investment companies and foreign private issuers are not required to provide the disclosure.

Companies must begin to comply with the new disclosure requirements in proxy and information statements that are required to include Item 402 executive compensation disclosure for fiscal years ending on or after Dec. 16.

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