The federal securities laws require clear, concise and understandable disclosure about compensation paid to CEOs, CFOs and certain other high-ranking executive officers of public companies. Several types of documents that a company files with the Commission include information about the company's executive compensation policies and practices. You can locate information about executive pay in: (1) the company's annual proxy statement; (2) the company's annual report on Form 10-K; (3) registration statements filed by the company to register securities for sale to the public; and (4) the company’s current report on Form 8-K.
The easiest place to look up information on executive pay is probably the annual proxy statement. Annual reports on Form 10-K and registration statements might simply refer you to the information in the annual proxy statement, rather than presenting the information directly. Click here for information on how to locate a company's annual proxy statement on the SEC's website.
In the annual proxy statement, a company must disclose information concerning the amount and type of compensation paid to its chief executive officer, chief financial officer and the three other most highly compensated executive officers A company also must disclose the criteria used in reaching executive compensation decisions and the degree of the relationship between the company's executive compensation practices and corporate performance. This information can be found in several separate disclosure items.
The Summary Compensation Table is the cornerstone of the SEC's required disclosure on executive compensation. The Summary Compensation Table provides, in a single location, a comprehensive overview of a company's executive pay practices. It sets out the total compensation paid to the company's chief executive officer, chief financial officer and three other most highly compensated executive officers for the past three fiscal years. The Summary Compensation Table is then followed by other tables and disclosure containing more specific information on the components of compensation for the last completed fiscal year. This disclosure includes, among other things, information about grants of stock options and stock appreciation rights; long-term incentive plan awards; pension plans; and employment contracts and related arrangements.
In addition, the Compensation Discussion and Analysis (“CD&A”) section explains all material elements of the company’s executive compensation programs.
NOTE: The decision by a company regarding the amount and type of compensation to give an executive officer is a business decision and is not within the jurisdiction of the Commission. Rather, the Commission's jurisdiction extends to disclosure - making sure that the investing public is provided with full and fair disclosure of material information on which to base informed investment and voting decisions. In this regard, the federal securities laws require disclosure of the amount and type of compensation paid to the company's CEO and other highly-compensated executive officers.