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SEC Eyes ‘Pay for Performance’ Rules Next Week

Joe Mont | April 24, 2015

The Securities and Exchange Commission has finally set a date for considering a “pay for performance” rule regarding executive compensation. On April 29 the Commission likely propose new  requirements that “registrants disclose, in a clear manner, the relationship between executive compensation actually paid and the financial performance of the registrant.”

Those disclosures, a requirement of the Dodd-Frank Act, will explain how executive pay (including annual bonuses, and long term incentives) corresponds to company performance. Disclosures will need to detail how company performance is defined and analyzed.

While nearly 60 percent of public companies have conducted an executive-pay-for-performance analysis, nearly two-thirds of them either did not tell shareholders the results or even disclosed that the analysis took place in their 2014 proxy statements, according to...

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