SEC Adopts Pay-for-performance Disclosure Rules

The U.S. Securities and Exchange Commission (SEC) recently adopted new rules¹ that will require many U.S. reporting companies to disclose in a clear manner the relationship between executive compensation actually paid and the company's financial performance. However, the rules generally will not apply to Canadian companies that report under the Multijurisdictional Disclosure System (MJDS), foreign private issuers, registered investment companies and emerging growth companies². Smaller reporting companies are subject to scaled back disclosure requirements.

What you need to know

• Companies must show how management pay aligns with corporate results. Although many companies have been including a description of the pay-for-performance elements of their executive compensation arrangements in their disclosure, companies subject to the new rules will have to disclose how the compensation actually paid to their principal executive officer (PEO) and other named executive