Making Executive Pay Disclosure Work Better for Investors

Following our participation in the SEC’s June 26th roundtable on executive compensation disclosure, the Center submitted detailed recommendations to streamline and modernize the current rules, with a focus on clarity, cost-effectiveness, and investor usefulness.

Our core message: executive pay disclosure should be principles-based, not prescriptive. Current requirements produce complex, duplicative, and lengthy disclosures that obscure—rather than clarify—the link between pay and performance. 

• Ditch the Tables. We recommend replacing the current maze of tables with just two: one showing total target compensation as granted, and another showing what was actually earned.
• Limit NEOs. We also urge the SEC to limit Named Executive Officer (NEO) disclosures to just the CEO and CFO—roles that are consistently comparable across companies and investor focus areas. This would reduce complexity, comparability issues, and compliance costs.
• On perquisites, we recommend excluding company-mandated security and aircraft use from compensation totals, recognizing them as business expenses, not personal perks. We also propose updating materiality thresholds for reporting minor perks.
• Dodd Frank. For pay versus performance, we suggest rescinding the current tabular requirements and allowing narrative disclosures instead. Similarly, we recommend revising the CEO pay ratio rule to ease compliance and amending clawback rules to align with statutory intent and support board discretion.
• Incentive comp. Finally, we urge regulators to abandon prior proposals under Section 956 of Dodd-Frank and pursue a principles-based approach that respects the evolution of incentive pay design since 2010.

We greatly appreciate all the terrific guidance, data and feedback from our SEC Working Group and members which informed our comments and advocacy. Our belief is that by implementing these reforms, the SEC can foster more transparent, meaningful disclosures that serve investors—without overburdening companies.