Main Menu
Download Print

Proxy Update – SEC Pay Versus Performance Disclosure Rule

Photo of

Action Items


In August 2022, the Securities Exchange Commission adopted a final rule requiring certain SEC registrants, excluding emerging growth companies (each, a “Registrant”) to provide certain tabular, narrative, and/or graphical disclosures describing the relationship between a Registrant’s executive pay and its financial performance for previous fiscal years (the “PVP Rule”). Smaller reporting company (“SRC”) Registrants are subject to scaled disclosure requirements. Each applicable Registrant must begin to comply with the PVP Rule for proxy and information statements filed for fiscal years ending on or after December 16, 2022.

Tabular Disclosure

The PVP Rule requires Registrants to provide the following tabular disclosure, subject to certain exclusions for SRC Registrants discussed below:

For the first year of the tabular disclosure, non-SRC Registrants must provide information with respect to the preceding three fiscal years (increasing to four years in 2024 and five years in 2025 and beyond), and SRC Registrants must provide information with respect to the preceding two fiscal years (increasing to three years in 2024 and beyond). A Registrant needs to thoughtfully calculate compensation “actually paid” to its principal executive officer (“PEO”) and its other named executive officers (“NEOs”). While some values used in calculating compensation “actually paid” to the Registrant’s PEO and other NEOs will reflect values reported in the proxy’s “Summary Compensation Table,” pension and equity award values will be calculated differently under the PVP Rule.

In addition to the PVP Rule’s uniquely calculated compensation values, the PVP Rule has also introduced the mandatory “Total Shareholder Return” (“TSR”) and “Company-Selected Measure” disclosures, neither of which SRC Registrants are required to provide. The new TSR disclosures will require each non-SRC Registrant to establish a TSR peer group, and the new Company-Selected Measure disclosure will require each non-SRC Registrant to establish what it views as the most important financial measure it uses to link executive compensation and company performance.

Graphical and/or Narrative Disclosure

The PVP Rule requires each Registrant to provide a clear description of the relationship between (i) each of the financial performance measures included in the tabular disclosure and the compensation “actually paid” to its PEO and other NEOs and (ii) such Registrant’s TSR and its peer group TSR. This disclosure can be accomplished through graphical and/or narrative disclosures.

Tabular List

The PVP Rule also requires Registrants to provide an unranked list of three to seven financial performance measures, which must include the Company-Selected Measure, used by the Registrant to link the compensation “actually paid” to the Registrant’s PEO and other NEOs to the Registrant’s performance.

We Can Help You

We thoughtfully approach each of our client’s annual proxy statements and provide individually tailored solutions to help our clients both meet developing legal requirements and strengthen their investor relations. Please contact us if you would like to discuss the PVP Rule or your annual proxy statement.


Related Professionals

Related Practice Areas

Back to Page

We use cookies on our website to improve functionality and performance, analyze website traffic and enable social media features. By continuing to use our website, you agree to our use of cookies.