SEC Proposes Dodd-Frank Pay-Versus-Performance Disclosure Rules

On April 29, 2015, the Securities and Exchange Commission (SEC) voted 3-2 to propose new rules requiring companies to disclose the relationship between executive compensation "actually paid" and the company's "financial performance." The proposed rules implement Section 14(i) of the Securities Exchange Act of 1934, as added by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. These disclosures would be required to be included in proxy or information statements in which executive compensation disclosure is currently required pursuant to Item 402 of Regulation S-K.
 
The pay-versus-performance rules are one of four governance and executive compensation-related provisions applicable to public companies under the Dodd-Frank Act that remain to be adopted by the SEC. Three of the four (pay-versus-performance, hedging policy and pay ratio) have now been proposed, leaving only the clawbacks rulemaking to be proposed. While not as controversial as