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Statement on Pay versus Performance:

Aug. 25, 2022

Today, the Commission adopted a rulemaking implementing key Dodd-Frank Act transparency provisions that give shareholders the ability to assess whether executive compensation is tied to corporate performance. I commend SEC Chair Gary Gensler for advancing this important priority that makes executive pay more accountable to shareholders.

With these vital reforms, investors will gain critical tools to make informed decisions on their investments and on their advisory votes on executive compensation. Combined with other Dodd-Frank Act financial stability provisions, this rulemaking will reduce the likelihood of future taxpayer bailouts.

A key factor driving the 2008 global financial crisis was the stark misalignment of incentives that led executives to take excessive, catastrophic risks. Congress initially addressed this problem by directing the U.S. Treasury Secretary to subject all recipients of taxpayer-assistance to executive compensation restrictions as a condition of such assistance.

The Dodd-Frank Act then addressed the absence of a disclosure standard by requiring the Commission to undertake today’s rulemaking, which will now bring much-needed transparency, comparability, and clarity into the relationship between executive compensation and a company’s financial performance.

Today’s action is the culmination of years of dedication and hard work by the Commission staff, particularly in the Division of Corporation Finance, the Office of the Chief Accountant, the Office of the General Counsel, and the Chair’s Office. They have demonstrated an unwavering commitment to fair and transparent markets.

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