Center to SEC: Focus on Principles, Not Prescriptions
If you could make one change to executive compensation disclosure regulations, what would it be? That was the question on the table at this week’s SEC Roundtable on Executive Compensation, live in Washington, DC.
What happened: Center CEO Ani Huang joined a bevy of executive compensation luminaries to share perspectives at the Roundtable, including PNC Human Resources Committee Chair Debra Cafaro, Mastercard EVP of Total Rewards Michael Lennartz, and ExxonMobil Global Head of Total Rewards Roland Schustereder.
The roundtable addressed the history of exec comp disclosure, the factors that influence the Compensation Committee’s decisions, and aspects of disclosure that are costly for companies and confusing for investors – in other words, elements that are ripe for change.
Key points the Center raised:
The Compensation Committee, not management or the CEO, decides executive pay based on a host of factors in a rigorous, governance-led process.
The CD&A is overly long and burdensome, resulting in less investor attention and higher company costs, and should be streamlined.
Reducing the number of NEOs, cutting unnecessary comp tables and reworking perks would all be welcome changes.
The Dodd-Frank Pay vs Performance rule is burdensome and misleading and should be made principles-based so companies can comply with existing disclosure.
Next steps: The Center filed preliminary comments advocating for the above changes, and we will collaborate with the Center Working Group on SEC Disclosure for a set of more detailed comments next month.
If your company plans to submit comments, make sure to do so by July 31 to help expedite the rulemaking process and make our voices heard!
Megan Wolf
Director, Practice, HR Policy Association and Center On Executive Compensation
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