A Practical Guide to the SEC’s Executive Compensation Disclosure Rules
Executive compensation disclosures in proxy statements and annual reports continue to garner attention and scrutiny by the Securities and Exchange Commission (SEC), shareholders, employees, the media and other stakeholder groups, as investors increasingly scrutinize not just pay levels, but the alignment between compensation and performance. At the same time, pay programs have grown more technical and multi‑layered, making it more challenging for companies to clearly and credibly explain their decisions. When alignment is unclear or unpersuasive, investors can express dissatisfaction through negative Say on Pay votes, opposition to compensation committee members, or resistance to equity plan approvals—signals that may be leveraged by activists and unsolicited acquirers. The introduction of the SEC’s more prescriptive Pay versus Performance (PvP) requirements raises the stakes further, adding a highly visible, XBRL‑tagged data set that will be easily analyzed, compared and used to identify perceived outliers. Against this backdrop of rising scrutiny and expanding disclosure obligations, companies are challenged not only to comply, but to clearly explain the story behind their compensation programs. This updated handbook, developed by experts at Gibson, Dunn & Crutcher LLP and WTW, provides practical guidance to help public companies navigate SEC compensation disclosure rules, proxy advisory firm perspectives and evolving investor expectations—enabling organizations to deliver clear, credible and compelling executive compensation narratives.
See Appendix A to this handbook for a copy of the full text of the rules, as amended through February 14, 2023. See Appendix B for the Compliance and Disclosure Interpretations issued through February 10, 2023 in connection with these rules.