Earlier today, the SEC reopened the comment period for the Dodd-Frank-mandated Pay Versus Performance rulemaking proposal that was initially released in 2015.
The SEC is seeking comment on the following topics in the re-opening release:
- Whether registrants should be required to disclose additional performance measures beyond total shareholder return
- Whether, if required, pre-tax net income and net income would be useful additional financial measures
- Whether registrants should be required to disclose the measure that, in their assessment, represents the most important performance measure they use to link compensation actually paid during the fiscal year to company performance
- Whether registrants should also be required to disclose a tabular list of their five most important performance measures used to determine compensation actually paid
SEC Commissioner Peirce issued this dissent:
While I agree that we should move forward on this nearly twelve-year-old Dodd-Frank rulemaking mandate, I do not agree with the approach taken in this release. Instead of fixing critical shortcomings of the 2015 Proposing Release, the re-opening release doubles down on a flawed proposal and raises the prospect of additional disclosure requirements. These supplemental requirements would increase the burdens of public company reporting, but seem likely to be of dubious use to investors... The additional requirements raised in this release go well beyond the statutory mandate of Section 953(a), are not responsive to the comment file, and do not seem warranted in light of current executive compensation practices related to company performance....
The Society’s 2015 comment letter on the proposal is here.
Comments are due 30 days after publication in the Federal Register. The Society plans to comment.
See this Bloomberg Law article and watch for additional analysis and commentary on our Pay for Performance page.