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Reporting Top Execs’ Pay

By Stephen Barlas
June 30, 2015
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Hand stacking coins

The Securities & Exchange Commission (SEC) published a proposed rule that requires companies to report information on what they pay their top executives. The Dodd-Frank Act already requires the disclosure, but the proposed rule would require a company to disclose executive pay and performance information for itself as well as for companies in its peer group. A company would be required to disclose executive compensation actually paid to its principal executive officer—the amount already disclosed in the summary compensation table in the proxy statement, making adjustments to the amounts included for pensions and equity awards. The amount disclosed for the remaining executive officers would be the average compensation actually paid to those executives. As for the performance measurement, a company also would be required to report its total shareholder return (TSR) and the TSR of companies in its peer group. All companies would be required to disclose the information for the last five fiscal years, except for smaller reporting companies, which would only have to disclose the last three fiscal years. Business groups such as the U.S. Chamber of Commerce have opposed the rule, saying the data will be expensive to come up with and confusing in some cases for investors.

 

Stephen Barlas has covered Washington, D.C., for trade and professional magazines since 1981 and since 1984 for Strategic Finance and its predecessor Management Accounting. You can reach him at sbarlas@verizon.net.
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