November 8, 2022
Pay vs. Performance: The “Smaller Reporting” Lens
At our “19th Annual Executive Compensation Conference” last month, we covered key action items for the SEC’s new pay versus performance disclosure rules – including how the rules differ for smaller reporting companies. This Pearl Meyer blog summarizes the major accommodations for scaled disclosure under the new rules (and other executive compensation disclosure requirements), for SRCs and EGCs. The Pearl Meyer team notes:
While at the outset, the scaled disclosures may give some companies a welcome reprieve, it may also give rise to an inconsistent or incomplete message for smaller companies. For example, in many smaller companies (that may not qualify as EGC), Net Income and Company TSR may not tell the full or even partial story of how pay aligns with performance.
As such, SRCs may consider voluntarily providing a company-selected measure or listing other measures that align with their pay program in a tabular list and/or providing some narrative around measures that otherwise drive pay and performance. For a further discussion of how certain growth stage companies may address these issues, please see this article.
The blog notes that if you’re an EGC or SRC, it’s important to understand the disclosure breaks you’re getting – and when those reprieves phase out.
We’ll be discussing the new pay vs. performance rules in detail this Thursday, November 10th, in our Special Session: “Tackling Your Pay Vs. Performance Disclosures” – which is a 3-part virtual event that runs from 1-4pm Eastern. If you haven’t already registered, you can still sign up online (you get a discounted price for being a CompensationStandards.com member). At this session, we’ll cover interpretive issues, big picture context (bridging the gap between your pay vs. performance disclosures and your CD&A story), and you’ll get first access to sample disclosures prepared by Dave Lynn & Mark Borges.
In addition, if you attended our fall conferences, you can can now access the on-demand video archives & transcripts, which will be helpful to refer back to for practical guidance on a variety of important proxy disclosure and executive compensation topics. If you weren’t able to attend, you can still email sales@ccrcorp.com to get access to this practical info!
– Liz Dunshee