The SEC’s Pay for Performance Rule: A Compliance Guide

Following multiple rounds of proposals, comments and re-proposals, the SEC has finally released its “Pay Versus Performance” disclosure rule. So much has changed in the years since the rule was originally proposed that the final rule seems to be “a day late and a dollar short,” as the Center argued in its comments to the SEC. Even though the mandated disclosure may be misleading (as it may contradict other pay for performance disclosures already in the proxy) and meaningless (because it is an assortment of unrelated items grouped together into a table), companies with fiscal years ending on or after December 16, 2022 will be required to include it in the 2023 proxy. We have developed this Compliance Guide to help Center members negotiate not only the technical aspects of the rule but the potential external ramifications of the disclosure. While many consultants and advisors have published excellent technical guides, our goal is to augment these overviews with a broader discussion of the implications of disclosure that the Compensation Committee and management may want to consider before the proxy is finalized.

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