SEC Proposes Pay-For-Performance Disclosure Rule
Disclosing how executive pay matches up with shareholder returns would be mandated by a proposed new rule of the Securities and Exchange Commission.
The SEC approved publishing the proposal by a 3-2 vote Wednesday, kicking off a 60 public comment period. A second vote is required for adoption.
Disclosure of executive compensation has long been required by the SEC in companies' annual proxy statements.
In a dissenting statement Wednesday, SEC Commissioner Daniel M. Gallagher called the proposed rule "another trudging step towards the federal government's intrusion into the realm of corporate governance."
But SEC Chairwoman Mary Jo White reportedly said the rule offers shareholders "a new metric for assessing a company's executive compensation relative to its financial performance."
The rule was developed under the Wall Street Reform and Consumer Protection Act of 2010, which among other things directed the SEC to require disclosure on the relationship between executive compensation and the financial performance of the issuers.
The rule proposed Wednesday is separate from a pay-ratio disclosure rule suggested under Dodd-Frank, which the SEC is reportedly still developing and which would reveal the ratio between a company's median pay and that of its chief executive.
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