The “Encyclopedia” of Executive Compensation Disclosures

Donnelley Financial Solutions (DFIN) partnered with WTW and Gibson, Dunn and Crutcher to publish a comprehensive “Executive Compensation Disclosure Handbook” for practitioners involved in drafting the proxy and SEC filings. This 300+ page guide could be considered the “go-to encyclopedia” for any question related narrative and table disclosures. It covers the common components addressed in the CD&A along with recommendations on how to depict the information and includes commentary on why a company may or may not choose to emphasize a key component.

For example, an organization under scrutiny for not having enough performance-based pay could use the pay mix graph as an opportunity to explain why options are used in their plan design and the rationale behind options being performance-based. The handbook provides tips for companies with low Say on Pay that want to expand upon recent changes and reiterate the logic behind their programs.

The handbook also discusses how the CD&A has transformed from its original “legal compliance” days to become a useful narrative in recent years to engage shareholders through easy-to-read language, graphics, and company branding. Today’s CD&A moves from a shareholder-only standpoint to a broader stakeholder perspective with the goal of “bringing readers inside the boardroom” to highlight the framework by which the Committee makes decisions and how these are linked to pay outcomes.

Additionally, the guide provides extensive details on:

• Executive tables: Includes definitions for each data element along with descriptions of what should be included in the footnotes and accompanying narrative.
  
  
• Voting Guidelines. Includes ISS and Glass Lewis voting standards for Say on Pay proposals, equity compensation plans and Say on Golden Parachute proposals.
  
  
• Pay Versus Performance. Now includes details for how to complete the PVP disclosure along with additional considerations for the less prescribed rules.
  
  
• Clawback regulations. Discusses the new rules that are expected to become effective on August 10, 2023.

Finally, the handbook offers best practices for how to engage the reader and tell a compelling story about the company. Additional information about how to create an impactful and visual appealing proxy can also be found in their interactive “Effective Proxies” guide which the Center has previously shared.