Dissenting Statement on Reopening of Comment Period for Pay Versus Performance
Jan. 27, 2022
While I agree that we should move forward on this nearly twelve-year-old Dodd-Frank rulemaking mandate, I do not agree with the approach taken in this release. Instead of fixing critical shortcomings of the 2015 Proposing Release, the re-opening release doubles down on a flawed proposal and raises the prospect of additional disclosure requirements. These supplemental requirements would increase the burdens of public company reporting, but seem likely to be of dubious use to investors. The re-opening release recognizes at some level that more discretion and flexibility is needed than the 2015 Proposing Release afforded, but that recognition oddly manifests itself in a flurry of new prescriptions. The additional requirements raised in this release go well beyond the statutory mandate of Section 953(a), are not responsive to the comment file, and do not seem warranted in light of current executive compensation practices related to company performance. I would have preferred a re-opening release that solicited further comment on whether we should permit companies greater flexibility to determine which financial performance measure is appropriate in this context and to determine how to calculate executive compensation actually paid. I respectfully dissent, but look forward to hearing commenters’ reactions.