SEC Revisits Pay-Versus-Performance
SEC Revisits Pay-Versus-Performance
On January 27, 2022, the U.S. Securities and Exchange Commission (“SEC”) reopened the public comment period regarding “pay-versus-performance.” The rules, originally proposed in 2015, would require companies to disclose information relating to the relationship between executive compensation paid and the company’s financial performance. The rules are designed to provide shareholders with more information when casting votes regarding executive compensation and board directors.
Under the proposal, companies would be required to disclose average compensation for executive officers and actual pay for CEOs. Additionally, companies would be required to disclose a metric known as total shareholder return which would aid investors in determining a company’s performance. According to SEC Chair Gary Gensler, “[i]f adopted, this proposed rule would strengthen the transparency and quality of executive compensation disclosure.”
The full proposal can be found here.
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