Resurface of Executive Compensation SEC Rulings and Regulations

Just last month, the National Law Review published this article on the Securities and Exchange Commission’s (SEC) attempt to again look into “pay versus performance” standards for some of the wealthiest CEO’s across the United States.

Back in 2015, the “pay versus performance” rule was first proposed to be added to the Dodd-Frank financial reform bill of 2010 (a piece of legislation passed in reaction to the financial crisis and Great Recession in the late-2000’s). Although the “pay for performance” section of Dodd-Frank wasn’t included in the final legislation which would require public company disclosure of executives and their compensation packages, SEC Commissioner Caroline Crenshaw released a statement reopening the comment period on the matter.

According to the National Law Review article, the changes to executive compensation rules and regulations are as follows:

“To calculate executive compensation under the rule, companies would report in their proxy statements the amount “actually paid” to their executives. This amount would include equity awards when they are vested, as opposed to when they are granted. Further, it would exclude any changes in the present value of benefits from defined benefit and pension plans. The rule, as currently proposed, would also require companies to include charts in their proxy statements that compare executive compensation with total shareholder return, a metric that the SEC has lauded as consistently calculated, objectively determinable, and already required in securities filings.”

If you don’t remember, executive compensation is a true passion of mine and a topic I’ve grown fond of while continuing to work with executive clients at IEM. Last July, I produced a video discussing executive compensation while diving into the ins and outs of what you should be on the lookout for if this topic impacts you.

~ Presented by Charles Stewart