The Dodd-Frank Wall Street Reform and Consumer Protection Act
(the "Act") was signed into law by President Obama on
July 21. The Act represents one of the most significant pieces of
financial reform legislation enacted in recent decades and contains
numerous corporate governance and securities law provisions that
require the attention of corporate executives. One such provision
relates to new disclosures on executive compensation.
Disclosure of Pay versus Performance
Section 953 of the Act amends the Securities Exchange Act to
include a new Section 14(i) called "Disclosure of Pay versus
Performance." This section requires the SEC to adopt rules
requiring public companies to disclose in their annual meeting
proxy statements a clear description of any compensation required
to be disclosed under Item 402 of Regulation S-K, including
information showing the relationship between the amount of
compensation paid and the company's financial performance,
taking into account
