January 31, 2014
In a speech this week, SEC Chair Mary Jo White directed the staff to begin a review of the Commission’s disclosure rules, including executive compensation disclosures, in an effort aimed at "rethink[ing] not only the type of information we ask companies to disclose, but also how that information is presented, where and how that information is disclosed, and how we can take advantage of technology to facilitate investors' access to information and make it meaningful to them." White's comments build on remarks made last October 2013 in which she voiced her concern that the current amount of corporate disclosures causes "information overload" and undermines the Commission's core purpose of investor protection. The more comprehensive disclosure review builds on a 105-page report mandated by the JOBS Act regarding whether current Securities law disclosures, including executive compensation and corporate governance disclosures, inhibit companies from accessing the public capital markets. In her speech this week, Chair White invited input from companies, investors, and other market participants with the ultimate objective of "improv[ing] the disclosure regime for the benefit of both companies and investors." The timing is ironic given that new disclosures mandated by the Dodd-Frank Act, including the pay ratio, pay for performance and clawbacks, that would increase the volume of required proxy disclosures are pending. However, this is a unique opportunity to shape how executive compensation disclosure can be made more meaningful in the electronic age, and the Association’s Center On Executive Compensation will engage its Subscribers and the SEC staff in providing our views on how to shape the disclosure regime of the future.