SEC Adopts Pay Versus Performance Rule On Executive Compensation

In the years following the banking and financial crisis of 2008, there was a particular focus by the media and lawmakers on CEOs and other executives collecting hundreds of millions of dollars in compensation. In response, the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act") sought to "strengthen the transparency and quality of executive compensation disclosure to investors."¹ The Dodd-Frank Act mandated that the Securities and Exchange Commission ("SEC") adopt rulemaking that would require public companies to disclose information regarding the relationship between executive compensation and the company's financial performance. The SEC first proposed pay versus performance rules in 2015 as part of their Dodd-Frank Act rulemaking mandates, but the rules remained in proposed form for seven years. In January 2022, the SEC reopened the comment period for the rules that were originally proposed in 2015. Now, well after a decade following