Statement Summary
In response to the evolving complexity of executive compensation disclosures since their introduction in 1992, the SEC is reviewing current requirements to ensure they provide meaningful information to investors. Although initial disclosures were designed for clarity, the focus has shifted to detailed components of compensation, potentially obscuring material information. To address this, the SEC will host a roundtable with public company representatives, investors, and experts to discuss these issues. The public is invited to contribute their opinions and comments on executive compensation disclosure through designated channels, which will be part of the public record and available on the SEC’s website. This initiative aims to streamline disclosures and enhance their relevance for investment and voting decisions.
Original Statement
When the Commission instituted tabular executive compensation disclosure in 1992, then-Chairman Richard C. Breeden championed an easily comprehensible disclosure regime centered around a graphical presentation of total executive compensation with comparisons against compensation of executives in peer firms and against the issuer’s performance. In the intervening years, disclosure requirements have been expanded to focus more and more on variations of components of compensation, rather than on total compensation. While it is undisputed that these requirements, and the resulting disclosure, have become increasingly complex and lengthy, it is less clear if the increased complexity and length have provided investors with additional information that is material to their investment and voting decisions.
It is important for the Commission to engage in retrospective reviews of its rules to ensure that they continue to be cost-effective and result in disclosure of material information without an overload of immaterial information. As part of this review of its executive compensation requirements, the SEC will host a roundtable with representatives from public companies and investors, as well as other experts in this field. Commission staff will provide further details about the roundtable’s agenda and speakers before the event.
As the staff develops that agenda, I have asked them to consider the questions outlined below. I also welcome and encourage members of the public to provide their views on these questions, either in advance of or after the roundtable.
Members of the public who wish to provide their views on executive compensation disclosure requirements may submit comments electronically or on paper. Please submit comments using one method only. Information that is submitted will become part of the public record of the roundtable and posted on the SEC’s website. All comments received will be posted without change. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make publicly available. All submissions should refer to File Number 4-855, and the file number should be included on the subject line if email is used.
Use the SEC’s Internet submission form or send an email to rule-comments with “4-855” included in the subject line. Send paper comments to Vanessa Countryman, Secretary, Securities and Exchange Commission, 100 F Street, N.E., Washington, D.C. 20549-1090.
[1] Executive Compensation Disclosure, Release No. 33-6962 (Oct. 16, 1992) [57 FR 48126 (Oct. 21, 1992)].
[2] Opening Statement of Richard C. Breeden, Chairman of the U.S. Securities and Exchange Commission, at the Public Meeting of the Commission, Proxy Rules and Executive Compensation, (June 23, 1992).
