The SEC on Thursday, Aug. 25, adopted amendments that require specific disclosures about the relationship between a public company’s executive compensation and its financial performance.
Registrants must start to comply in proxy and information statements that require Item 402 executive compensation disclosures for fiscal years ending on or after Dec. 16, 2022.
The amendments require public companies to provide a table of information for their five most recently completed fiscal years featuring their total shareholder return (TSR), the TSR of companies in the registrant's peer group and their net income. Most companies also must report a financial performance measure chosen by the registrant.
The amendments also require companies to provide a list of three to seven “most important performance measures” that best link executive compensation actually paid to company performance. Read more.