September 25, 2023
Pay versus Performance: Don’t Forget Your XBRL Tags!
I blogged a couple weeks ago on TheCorporateCounsel.net that Corp Fin posted a “Dear Issuer” letter to flag common XBRL deficiencies that the Staff is noticing. One of the reasons the Staff issued the comment letter at this time is because of the new pay versus performance tagging requirements and its impression that investors will be using this data. Here are the two sample comments that highlight where required XBRL tags are being missed:
– Pay versus Performance: Disclosure under Regulation S-K Item 402(v) must be in Inline XBRL, in accordance with Item 405 of Regulation S-T and the EDGAR Filer Manual. Please ensure that you have provided the appropriate Inline XBRL tagging for all the required Item 402(v) data points.
– Pay versus Performance: Refer to the [relationship disclosures] graph. Although it is permissible to combine one or more sets of relationship disclosures under Regulation S-K Item 402(v)(5) into one graph, table, or other format, note that you must still provide separate XBRL tags for each required item. Please ensure that you have provided the appropriate Inline XBRL tagging for all the required Item 402(v) data points.
At our 20th Annual Executive Compensation Conference on Friday, our “SEC All-Stars” discussed the complexities of XBRL tagging requirements creeping into proxy statement disclosures – and the consequences of missing them. The SEC’s “Semi-Annual Report to Congress on Machine Readable Data for Corporate Disclosures” points out that both Corp Fin and the Enforcement Division are using machine readable data. The Appendix to the Report shows that Schedule 14A/14C now require tags for these items:
• Disclosure required by Item 402(v) of Regulation S-K (pay versus performance) must be tagged in Inline XBRL.
• Disclosure required by Item 402(w) of Regulation S-K (registrant’s action to recover erroneously awarded compensation) must be tagged in Inline XBRL.
• Disclosure required by Item 402(x) of Regulation S-K (registrant’s policies and practices related to the grant of certain equity awards close in time to the release of material non-public information) must be tagged in Inline XBRL.
• Disclosure required by Item 408(b)(1) of Regulation S-K (registrant’s insider trading arrangements and policies) must be tagged in Inline XBRL.
• Filing fee exhibits must be tagged in Inline XBRL.
– Liz Dunshee