New SEC Disclosure Rules on Pay for Performance

by Matt Skrinjar 28. May 2015 13:27
Last month, the SEC issued a proposal for new rules related to executive compensation and pay for performance. The proposed guidelines serve as amendments to section 953(a) of Dodd-Frank and will require companies to disclose the compensation paid to executives alongside the company’s total shareholder return. The information will be provided in the form of an additional table in a given company’s annual proxy statement. The pay component will include total compensation for the CEO, as well as an average of the remaining top executives for whom compensation disclosure requirements already exist. Total compensation is already part of the summary compensation table found in a typical annual proxy, but the new guidelines will require that “total” be displayed a bit differently. In particular, equity compensation will be measured as the value of those stock or option awards that have vested in a given period rather than the grant-date values found in the summary compensation table. Also, any increases to pension or retirement plan values will be excluded from total compensation if they do not apply to services in the given period. [More]