On April 29, 2015, the US Securities and Exchange Commission proposed rules that would require companies to disclose to shareholders the relationship between executive compensation and the financial performance of a company. The proposal, which is designed to enhance company transparency and to allow shareholders to be better informed when making voting decisions to elect directors, would require a company to disclose for itself as well as for other companies in its peer group certain information, including but not limited to information regarding executive pay and performance as well as total shareholder return. Under the rule, companies would be required to disclose the relevant information for the last five fiscal years. Smaller reporting companies, as defined in the proposed rule, would only be required to provide disclosure for the last three fiscal years. The proposed rule provides for a phased-in compliance period for these requirements. The comment period for the SEC proposal is 60 days after publication in the Federal Register which occurred on April 29, 2015.

You may like to read our client note on this development, available at: http://www.shearman.com/~/media/Files/NewsInsights/Publications/2015/05/SEC-Proposes-LongAwaited-PayVersus-Performance-Rules-ECEB-050415.pdf. The SEC press release is available at: http://www.sec.gov/news/pressrelease/2015-78.html