The SEC issued a press release Thursday announcing it has re-opened comments on its 2015 Dodd-Frank Pay for Performance rule, with several proposed additions including new performance metrics that each company would be required to disclose.
- Failure to provide a clear picture of the pay for performance link;
- Tacit support of TSR as the sole metric for performance; and
- Sacrificing accuracy for comparability by forcing registrants to adhere to a standardized table.
According to the new
fact sheet and
proposal, the SEC has reacted to comments like ours not by reworking the rule, but by adding the following requirements:
- The addition, to the existing proposed pay for performance table, of pre-tax net income and net income versus CEO and NEO pay.
- The further addition of a single metric of the company’s choice, to be included in that same table.
- A separate table containing the company’s “five most important performance measures used to determine compensation actually paid.”
As Commissioner Hester Peirce stated in her
dissent, it is hard to understand how the SEC seeks to add sorely needed discretion and flexibility to this rule through what is essentially “a flurry of new prescriptions,” none of which addresses the concerns of commenters on the original rule. The Center will comment within the truncated 30-day period and will seek to engage Center members quickly as part of that process.