SEC Adopts Pay For Performance Rules

On August 25, the SEC adopted rules¹ implementing the pay for performance disclosure mandated by the Dodd-Frank Act. The rules, originally proposed in 2015 and subject to a reopened comment period earlier this year, require a company to disclose, in a proxy or information statement with executive compensation disclosure, how compensation actually paid related to company financial performance over a five-year period (or three-year period in the case of a smaller reporting company). These new disclosure requirements, which are intended to provide investors with more transparent, readily comparable and understandable disclosure of a company's executive compensation, do not apply to emerging growth companies, registered investment companies, or foreign private issuers.