On January 27, 2022, the US Securities and Exchange Commission (SEC) reopened the comment period for the proposed "pay-versus-performance" rules mandated by the Dodd-Frank Act, which would require disclosure of information regarding a company's executive compensation and the company's financial performance. The original comment period closed on July 6, 2015.
The compensation discussion and analysis required by Item 402 of Regulation S-K is more "principles-based" when it comes to explaining the relationship between executive pay and performance.
In its original proposal in 2015, the SEC noted that it was proposing this disclosure requirement to give company shareholders "a new metric for assess[ment]" when voting on executive compensation under the Securities Exchange Act of 1934 (Exchange Act).
This week, SEC Chair Gary Gensler stated that the proposed rules "strengthen the transparency and quality of executive compensation disclosure," and he added that reopening the comment period would allow the SEC to consider if "additional performance metrics would better reflect Congress's intention in the Dodd-Frank Act... and provide shareholders with information they need to evaluate a company's executive compensation policies."
The comment period will be open for 30 days after Federal Register publication.
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