SEC Proposes "Pay Versus Performance" Disclosure Rules

On April 29, the SEC proposed the long-awaited "pay versus performance" disclosure rules mandated by the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. The new disclosure would be added to Item 402 of Regulation S-K as new paragraph (v), and would be required in proxy and information statements in which Item 402 executive compensation information is required, but would not be required in registration statements or Form 10-K. The new disclosures would not be required for foreign issuers or emerging growth companies, but would be required on a scaled-down basis for other smaller reporting companies.

Although the timing and content of the final rule is unclear, pending the public comment process, the proposed rule reflects the SEC's view that such disclosure will assist shareholders in determining how to vote on "say on pay" proposals.