On April 29, 2015, pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the Securities and Exchange Commission (SEC) voted 3 to 2 to approve a proposed amendment to executive compensation rules in Item 402 of Regulation S-K. The proposed amendment directs the SEC to adopt rules requiring registrants to disclose in their proxy or information statements the relationship between executive compensation actually paid and the financial performance of the registrant.
Specifically, the SEC is proposing new Item 402(v) of Regulation S-K that would require “a registrant to provide a clear description of (1) the relationship between executive compensation actually paid to the registrant’s NEOs [(Named Executive Officers)] and the cumulative total shareholder return (TSR) of the registrant, and (2) the relationship between the registrant’s TSR and the TSR of a peer group chosen by the registrant, over each of the registrant’s five most recently completed fiscal years.” Such disclosure should be made taking into account any change in the value of the shares of stock and dividends of the registrant and any distributions.
The SEC is seeking comments to the proposed rules which can be made in the following manner:
- Use the Commission’s Internet comment form; or
- Send an email to email@example.com and include File Number S7-07-15 on the subject line; or
- Use the federal eRulemaking portal and follow the instructions for submitting comments.
- Send paper comments to:
Brent J. Fields, Secretary, Securities and Exchange Commission
100 F St. NE
Washington, DC 20549-1090