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Monday, November 2, 2015

With all the rulemaking required under the Dodd-Frank Act, it can sometimes be hard to keep up with the status of the various rules.  Below is a handy chart that details the current status of the various executive compensation rulemakings.  We plan to update this periodically for additional rulemakings, so be sure to come back and visit from time to time.

Last Updated: November 2, 2015

Provision Summary Status of SEC Rulemaking
Say on Pay; Say on Golden Parachutes
§ 951
Requires advisory vote of shareholders on executive compensation and golden parachutes; advisory vote on frequency of say on pay
  • Final rule: adopted January 25, 2011; SEC Rel. No. 33-9178
Compensation Committee Independence
§ 952(includes comp consultant conflicts)
Requires stock exchanges to adopt listing standards that require:

  • compensation committee members to be “independent;”
  • each committee must   have the authority to engage compensation advisers and before selecting any adviser, the committee must take into consideration specific independence factors; and
  • the committee must be directly responsible for the appointment, comp and oversight of the advisers and the company must provide funding.

Requires disclosure of whether the committee obtained advice of a comp consultant, and whether the work raised a conflict of interest and how it was addressed

  • Final rule: adopted June 20, 2012 requiring exchanges to adopt listing standards; SEC Rel. No. 33-9330
  • SEC approved listing standards in January 2013 exchanges subsequently adopted the required listing standards
Clawback Policy
§ 954
Requires the company to develop, implement and disclose its policy for recovery of excess incentive-based compensation
  • Proposed rule: released July 1, 2015; SEC Rel. No. 33-9861
Disclosure
Pay versus Performance
§ 953(a)
Requires disclosure of the relationship between executive compensation “actually paid” and the company’s financial performance
  • Proposed rule: released April 29, 2015; SEC Rel. No. 34-74835
Pay Ratio – Internal Pay Equity
§ 953(b)
Requires disclosure of: (1) the median of the annual total compensation of all employees (except the CEO); (2) the annual total compensation of the CEO; and (3) the ratio of the amount in (1) to the amount in (2).For purposes of the ratio, the amount in (1) equals one (1:450), or, the ratio may be expressed as a narrative (the CEO’s annual total compensation is 450 times that of the median annual total compensation of all employees)
  • Final rule: released August 5, 2015; SEC Rel. No. 33-9877 (first reporting period for fiscal year beginning January 1, 2017 – typically disclosed in the 2018 proxy statement); new Reg. S-K Item 402(u)
Hedging
§ 955
Requires disclosure of whether any employee or director may hedge or offset any decrease in the fair market value of company stock
  • Proposed rule: released February 9, 2015; SEC Rel. No. 33-9723
Chair and CEO positions
§ 972
Requires disclosure of chairman and CEO structure
  • No planned guidance for this provision; see Reg. S-K Item 407(h)
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