Pay-Versus-Performance: SEC Proposes Rules to Expand Executive Compensation Disclosure in Proxy Materials

Morrison & Foerster LLP
Contact

Nearly five years after the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”) was enacted in July 2010, the SEC narrowly approved proposed rules required under Section 953(a) of the Act. Section 953(a) of the Act added Section 14(i) to the Securities Exchange Act of 1934 (the “Exchange Act”), which directs the SEC to adopt rules requiring companies to disclose in a clear manner the relationship between executive compensation actually paid and the financial performance of the company, as measured by share price appreciation and dividends or distributions. In proposing these rules, SEC Chair White commented that the disclosure contemplated by the rules would “better inform shareholders and give them a new metric for assessing a company’s executive compensation relative to its financial performance.”

While the Act is principally focused on changes to the financial regulatory system, Title IX of the Act includes corporate governance, compensation and disclosure provisions that apply to public companies, regardless of industry. This latest rule proposal follows the SEC’s previous rulemaking efforts on these topics, notably “say-on-pay” (final rules adopted 2010), compensation committee and adviser independence (final rules adopted January 2013), enhanced incentive compensation restrictions and disclosure for covered financial institutions (rules proposed March 2011), proxy access (rules adopted in August 2010 and invalidated by a court ruling in July 2011), CEO pay ratio (rules proposed September 2013), and employee and director hedging (rules proposed February 2015). In addition, the national securities exchanges have taken action to implement the Act’s compensation committee and adviser independence requirements.

Please see full publication below for more information.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP | Attorney Advertising

Written by:

Morrison & Foerster LLP
Contact
more
less

Morrison & Foerster LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide