The Securities and Exchange
Commission (SEC) in late April proposed a ruling that would require
corporations to disclose the relationship between executive pay and fiscal
performance. The proposed rules would create a greater dimension of
transparency and allow shareholders to be better informed when they elect
directors.
“These proposed rules would
better inform shareholders and give them a new metric for assessing a company’s
executive compensation relative to its financial performance,” SEC Chair Mary Jo
White stated in the news release. “The proposal would require enhanced
disclosure that can be compared across companies.”
Per the proposed ruling,
companies will be required to disclose executive compensation and performance
results in a new table and tag in the information in interactive data format.
Additionally, the company would also be required to report its total
shareholder return (TSR) and the TSR of companies in a peer group.
Companies would be required to
disclose information for the last five fiscal years, with exception for smaller
reporting companies, which would only be required to disclose information for
the last three fiscal years.
The comment period for the newly
proposed rules will be 60 days after publication in the Federal Register.
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