Proposed Rule on Executive Compensation and Performance
Shareholders Can Gain a Better Understanding of Corporate Governance
On April 29, 2015, the SEC proposed a ruling that would require corporations to disclose the relationship between executive pay and fiscal performance. SEC Chair Mary Jo White stated that the ruling would better inform shareholders of voting proposals set forth by companies and provide a new measure for evaluating companies. White added that the proposed rules would allow for an optimized disclosure method that can be used as another tool for comparing results with other companies.
How the Proposed Rules Affect Tagging in XBRL
Under the proposed ruling, companies will need to disclose executive compensation and performance results in a new table that that will need to be tagged in XBRL format. Companies will need to convey the amount paid to its principal executive officers using the information disclosed in the summary compensation table from its proxy statement. Adjustments will need to be made to amounts included in pension and equity awards. Additional compensation amounts for executive officers would be derived from the average compensation paid to those executives.
Furthermore, companies would need to disclose its total shareholder return ("TSR") on an annual basis. In addition, the TSR would be compared with related corporations in a peer group. Large and Midsize companies will be required to disclose this information from the previous five years. Smaller Reporting Companies will only be required to disclose the preceding three fiscal years of information. The ruling will implement phase-in periods for the requirements.
The proposed rules will be subject to a 60 day comment period prior to approval.
Published: May 21, 2015
Author: Dan Carter
Recent Featured Articles
- House of Representatives Passes Accelerated Access to Capital Act
- Dodd-Frank Rollback Bill Clears House Committee
- DTC Rule Change: Deposit Chills and Global Locks
- New SEC Rules for Intrastate Crowdfunding
- SEC Meets Small and Emerging Companies
- What is DTC Eligibility?
- Selecting a Crowdfunding Transfer Agent
- IEX - A New National Stock Exchange
- OTCQX Rules Release Number 11
- Funding Portal Guide for Title III Crowdfunding
- Company Guide for Title III Crowdfunding
- H.R. 3784 - SEC Small Business Advocate Act
- H.R. 2187 - Fair Investment Opportunities
- H.R. 1675 - Capital Markets Improvement Act
- SEC FAST Act with Revisions to Forms S-1, F-1
- DTC CUSIP Eligibility Fee on Corporate Actions
- SEC Adopts CEO Pay Ratio Disclosure
- OTCQB Allows Regulation A Listing
- Proposed Rule on Executive Compensation
- SEC Issues Final Rules on Regulation A+
- What Issuers Can Expect from Crowdfunding
- SEC Issues Proposal on Crowdfunding
- Side-by-Side Analysis of XBRL
- The Lesson's of Citigroup's Say on Pay Loss
- STA Rebutes NYSE on Proxy Fee Increases
- Impact of the XBRL Limited Liability Expiration
- XBRL HR 37 Exemption Rejected
- 5 Tips on XBRL Compliance