On April 29, the Securities and Exchange Commission (SEC)
proposed new rules to require public companies to disclose in their
annual proxy statements the relationship between compensation
actually paid to their executives and the financial performance of
the company. The proposed rules were adopted under Section 953(a)
of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection
Act. The SEC stated the proposed rules are intended to provide
greater transparency and allow shareholders to be better informed
when they vote in director elections or on public companies'
non-binding executive compensation "say-on-pay"
proposals.
If adopted, the new rules will result in additional data
gathering and drafting responsibilities for public companies, but
the rules also may present new shareholder outreach opportunities
to explain the alignment of executive compensation and company
performance. Following is a summary of the proposed rules.
