Statement on Pay versus Performance

Today, the Commission is reopening the comment period for a proposed rule for corporate disclosure of “pay versus performance.” I support this proposed rule because, if adopted, it would strengthen the transparency and quality of executive compensation disclosure.

The rule proposal would fulfill a mandate from Congress under the Dodd-Frank Act of 2010, passed after the 2008 financial crisis.

“Pay versus performance” disclosures describe the relationship between the executive compensation an issuer actually paid and the financial performance of that issuer. Such disclosures would make it easier for shareholders to assess the company’s decision-making with respect to its executive compensation policies.

The Commission has long recognized the value of information on executive compensation to investors. The first requirements to make disclosures about executive compensation originated in the 1933 Act. Since then, from time to time the Commission has continued to update compensation disclosure requirements.

In 2015, the Commission proposed rules to implement the Dodd-Frank Act’s “pay versus performance” requirement. These proposed rules relied upon total shareholder return as the sole measure of financial performance. Some commenters expressed concerns that total shareholder return would provide an incomplete picture of performance.

In this reopening release, we are considering whether additional performance metrics would better reflect Congress’s intention in the Dodd-Frank Act and would provide shareholders with information they need to evaluate a company’s executive compensation policies. 

I’m pleased to support today’s reopening release and look forward to the public’s feedback. I’d like to extend my gratitude to the members of the SEC staff who worked on this item, including:

• Renee Jones, Erik Gerding, Connor Raso, Lindsay McCord, Jennifer Zepralka, Anne Krauskopf, Angie Kim, and Jeb Byrne in the Division of Corporation Finance;
• Bryant Morris, Dorothy McCuaig, and Ken Alcé in the Office of the General Counsel;
• Jessica Wachter, Vlad Ivanov, Tara Bhandari, Mike Willis, Julie Marlowe, PJ Hamidi, Robert Miller, and Lauren Moore in the Division of Economic and Risk Analysis;
• Brian Johnson, Amanda Wagner, and Amy Miller in the Division of Investment Management; and
• Kristin Pauley, Marc Johnson, and Laura Metcalfe in the Division of Enforcement;
• Jonathan Wiggins, Omid Harraf, Larry Yusuf, and Mark Jacoby in the Office of Chief Accountant.