Pay-Versus-Performance: SEC Proposes Rules To Expand Executive Compensation Disclosure In Proxy Materials

Nearly five years after the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Act") was enacted in July 2010, the SEC narrowly approved proposed rules required under Section 953(a) of the Act. Section 953(a) of the Act added Section 14(i) to the Securities Exchange Act of 1934 (the "Exchange Act"), which directs the SEC to adopt rules requiring companies to disclose in a clear manner the relationship between executive compensation actually paid and the financial performance of the company, as measured by share price appreciation and dividends or distributions. In proposing these rules, SEC Chair White commented that the disclosure contemplated by the rules would "better inform shareholders and give them a new metric for assessing a company's executive compensation relative to its financial performance."