The Advisors' Blog

This blog features wisdom from respected compensation consultants and lawyers

March 18, 2014

Status of Corp Fin’s Executive Pay Disclosure Rulemakings

Broc Romanek,

Recently, Corp Fin Director Keith Higgins provided a status update on the Four Horsemen rulemakings from Dodd-Frank during a February PLI panel on governance. I wasn’t there but I understand that this was the gist:

– As noted in the SEC’s reg flex agenda posted in December, the SEC intends to adopt a pay ratio rule & propose the other mandated rules in 2014. Whether that really happens depends on the Commissioner’s own workload, but the Corp Fin Staff will be ready to make this happen if they want.

– On the pay ratio proposal, there were 127,000 comment letters, of which 900 were “unique” letters (not “form” letters). Some of the comments were general, such as stating that data privacy would be an issue without specific information. The bulk of detailed comments dealt with non-US employees.

– The clawback & hedging/pledging proposals probably will be easier than the pay-for-performance proposal. The biggest challenge for the clawback proposal will be the no-fault aspect. The pay-for-performance proposal is a challenge because the statute mandates disclosure of compensation “actually paid” without describing what that is. The Corp Fin Staff has been looking at voluntary disclosure of “realized” and “realizable” pay – but does not think those are good models because they are all over the map (and are sometimes criticized for leaving out important components of pay).