SEC Proposes Pay-for-Performance Disclosure Rule: SEC Proposes Proxy Disclosure Rule on Relationship of Executive Compensation Actually Paid and Issuer Financial Performance

Sullivan & Cromwell LLP - April 29, 2015

As expected, this morning the SEC proposed a rule that would require reporting issuers to disclose the relationship between named executive officer “actual” pay and the issuer’s and its peers’ total shareholder return. This proposed rule would implement Section 953(a) of the Dodd-Frank Act. If finalized, the disclosure would be required in proxy statements and consent solicitations in which executive compensation disclosure is required. The proposed rule would apply to SEC registrants, other than foreign private issuers, registered investment companies and emerging growth companies. The proposal was approved by a 3 to 2 vote, with Chair White being joined by Commissioners Aguilar and Stein in voting for the measure while Commissioners Gallagher and Piwowar voted against the proposal.

The text of the proposed rule has not yet been published, but the materials accompanying the SEC’s proposal provide significant detail regarding the content of the proposed disclosure.