{"id":2263,"date":"2022-11-10T11:50:13","date_gmt":"2022-11-10T16:50:13","guid":{"rendered":"https:\/\/seci.wpenginepowered.com\/?p=2263"},"modified":"2022-11-10T11:50:17","modified_gmt":"2022-11-10T16:50:17","slug":"sec-adopts-final-pay-versus-performance-disclosure-requirements","status":"publish","type":"post","link":"https:\/\/seciblog.pli.edu\/index.php\/sec-adopts-final-pay-versus-performance-disclosure-requirements\/","title":{"rendered":"SEC Adopts Final Pay Versus Performance Disclosure Requirements"},"content":{"rendered":"\n<p>On August 25, 2022, the SEC adopted a <a href=\"https:\/\/www.sec.gov\/rules\/final\/2022\/34-95607.pdf\">final rule<\/a> to implement the pay versus performance disclosure requirements mandated by the Dodd-Frank Act.&nbsp; The rules are intended to provide insight into the relationship between compensation \u201cactually\u201d paid to senior executives and financial performance.<\/p>\n\n\n\n<p>The rules will apply to all reporting companies, except foreign private issuers, registered investment companies, and Emerging Growth Companies. &nbsp;Smaller Reporting Companies will be permitted to provide scaled disclosures.<\/p>\n\n\n\n<p>The disclosures are included in new Item 402(v) of Regulation S-K.&nbsp; The disclosures will start with a table that will include specified executive compensation and financial performance measures. &nbsp;The form of the table in new Item 402(v) is:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"617\" src=\"https:\/\/seciblog.pli.edu\/wp-content\/uploads\/Screen-Shot-2022-08-26-at-2.00.23-PM-1024x617.png\" alt=\"\" class=\"wp-image-2264\" srcset=\"https:\/\/seciblog.pli.edu\/wp-content\/uploads\/Screen-Shot-2022-08-26-at-2.00.23-PM-1024x617.png 1024w, https:\/\/seciblog.pli.edu\/wp-content\/uploads\/Screen-Shot-2022-08-26-at-2.00.23-PM-250x151.png 250w, https:\/\/seciblog.pli.edu\/wp-content\/uploads\/Screen-Shot-2022-08-26-at-2.00.23-PM-150x90.png 150w, https:\/\/seciblog.pli.edu\/wp-content\/uploads\/Screen-Shot-2022-08-26-at-2.00.23-PM-768x463.png 768w, https:\/\/seciblog.pli.edu\/wp-content\/uploads\/Screen-Shot-2022-08-26-at-2.00.23-PM-1536x926.png 1536w, https:\/\/seciblog.pli.edu\/wp-content\/uploads\/Screen-Shot-2022-08-26-at-2.00.23-PM.png 2040w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p>The information will be provided for five years.&nbsp; As the above column headings illustrate, the information required in the table will be provided for the company\u2019s principal executive officer (\u201cPEO\u201d) and, as an average, for the other named executive officers (\u201cNEOs\u201d).&nbsp; Included in the disclosure will be the Summary Compensation Table measure of total compensation.&nbsp; It will also include a new measure, \u201cexecutive compensation actually paid.\u201d &nbsp;The computation of \u201cexecutive compensation actually paid\u201d is specified in the rule, and in general starts with total compensation from the Summary Compensation Table, adjusted for certain pension and share-based payment benefits.<\/p>\n\n\n\n<p>The financial performance measures to be included in the table are:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Total shareholder return (\u201cTSR\u201d) for the company;<\/li><li>TSR for the company\u2019s peer group;<\/li><li>The company\u2019s net income; and<\/li><li>A \u201cCompany-Selected Measure\u201d that should represent \u201cthe most important financial performance measure used to link compensation actually paid to the NEOs to company performance for the most recently completed fiscal year.\u201d<\/li><\/ul>\n\n\n\n<p>The new disclosure must include \u201ca clear description of the relationships between each of the financial performance measures included in the table and the executive compensation actually paid to its PEO and, on average, to its other NEOs over the five most recently completed fiscal years.\u201d<\/p>\n\n\n\n<p>The relationship between TSR and peer group TSR must also be discussed.<\/p>\n\n\n\n<p>The new disclosure will also include other financial performance measures that a company determines are its most important measures of performance.<\/p>\n\n\n\n<p>This information must be tagged with Inline XBRL.<\/p>\n\n\n\n<p>You can find details in the accompanying <a href=\"https:\/\/www.sec.gov\/files\/34-95607-fact-sheet.pdf\">Fact Sheet<\/a> and <a href=\"https:\/\/www.sec.gov\/rules\/final\/2022\/34-95607.pdf\">final rule<\/a>.<\/p>\n\n\n\n<p>The new rules will be effective 30 days after publication in the Federal Register. &nbsp;Companies will be required to make these new disclosures in proxy and information statements that include Item 402 executive compensation disclosure for fiscal years ending on or after December 16, 2022.<\/p>\n\n\n\n<p>You can read statements from Chair Gary Gensler and other Commissioners at the \u201c<a href=\"https:\/\/www.sec.gov\/news\/speeches-statements\">Speeches and Statements<\/a>\u201d section of sec.gov.<\/p>\n\n\n\n<p>As always, your thoughts and comments are welcome!<\/p>\n","protected":false},"excerpt":{"rendered":"<p>On August 25, 2022, the SEC adopted a final rule to implement the pay versus performance disclosure requirements mandated by the Dodd-Frank Act.&nbsp; The rules are intended to provide insight into the relationship between compensation \u201cactually\u201d paid to senior executives and financial performance. The rules will apply to all reporting companies, except foreign private issuers, &hellip; <a href=\"https:\/\/seciblog.pli.edu\/index.php\/sec-adopts-final-pay-versus-performance-disclosure-requirements\/\" class=\"more-link\">Continue reading <span class=\"screen-reader-text\">SEC Adopts Final Pay Versus Performance Disclosure Requirements<\/span> <span class=\"meta-nav\">&rarr;<\/span><\/a><\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"_wpas_customize_per_network":false},"categories":[1],"tags":[],"coauthors":[154],"class_list":["post-2263","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/posts\/2263","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/comments?post=2263"}],"version-history":[{"count":0,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/posts\/2263\/revisions"}],"wp:attachment":[{"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/media?parent=2263"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/categories?post=2263"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/tags?post=2263"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/seciblog.pli.edu\/index.php\/wp-json\/wp\/v2\/coauthors?post=2263"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}