On June 26, 2026, the Securities and Exchange Commission (“SEC”) hosted a roundtable to discuss whether executive compensation disclosure rules produce information material to investors and if not, how they should be amended. The roundtable consisted of representatives from public companies and investors, as well as other experts in this field. Remarks were made by SEC Chair Paul S. Atkins and the other sitting commissioners. A recording of the roundtable is available on the SEC’s website here. Chair Atkins noted in his remarks that one might describe the SEC’s current compensation disclosure requirements as a “Frankenstein patchwork of rules.” He suggested that the compensation disclosure rules have become unwieldy, are not cost-effective and result in disclosure that a reasonable investor struggles to understand. Commissioners Hester Peirce and Mark Uyeda echoed his views. We expect that the SEC will issue one or more rule proposals amending executive compensation disclosure requirements, possibly later this year.
Prior to the roundtable, on May 16, 2026, Chairman Atkins issued a statement, including questions for the SEC staff to consider, and invited the public to submit comments on executive compensation disclosure. A number of comments were submitted prior to the roundtable, which are available on the SEC’s website here. At the roundtable on June 26, Chairman Atkins indicated that any further comments should be submitted in the next several weeks to be considered in any rule proposal that is issued.
Executive compensation is perennially a hot topic. Issuer panelists and investor panelists were not always on the same page on potential disclosure reform. Issuer panelists generally sought rationality and flexibility in compensation disclosure. Investor panelists were interested in improved navigability and comparability of compensation disclosure. Some of the executive compensation disclosure topics covered during the roundtable include:
- Alignment of compensation disclosure with compensation decision-making. Chair Atkins and certain roundtable panelists wondered if there was a way to better align compensation disclosure with how compensation decisions are actually made by a company. Panelists inquired whether compensation disclosure should reflect information reviewed by boards and committees in making compensation decisions.
- Perquisites. Under a 2006 rulemaking,[1] an item is not a perquisite (perk) or personal benefit if it is integrally and directly related to the performance of the executive’s duties. The concept of a benefit that is “integrally and directly related” to job performance is a narrow one. Otherwise, an item is a perquisite or personal benefit if it confers a direct or indirect benefit that has a personal aspect, without regard to whether it may be provided for some business reason or for the convenience of the company, unless it is generally available on a non-discriminatory basis to all employees. In the 2006 rulemaking, the SEC specifically indicated security provided at a personal residence or during personal travel is perquisite. The existing SEC rules and guidance on perquisites also lead most companies to conclude that the provision of technology to an executive to facilitate working from home is a perquisite. These perspectives seem antiquated now, given the experience with COVID and increased threats against executives. There was support among panelists for a more facts and circumstances determination regarding whether an item provided by the company to an executive is a perquisite, and modification or elimination of the SEC guidance on items that are presumptively perquisites.
- Pay-for-performance. Many panelists expressed frustration with the SEC’s implementation of the Dodd-Frank Act[2] mandated pay versus performance rules,[3] requiring companies to disclose both quantitatively and qualitatively, in both tabular and narrative formats, how the compensation actually paid to executives relates to company financial performance over a five-year time horizon. Panelists thought “compensation actually paid” requires a complex calculation that makes it hard to both produce and interpret the disclosure. A panelist indicated there is enough experience that suggests the costs to prepare the disclosure are much greater than any benefit of the rule.
- CEO pay ratio. The SEC’s implementation of the CEO pay ratio rules[4] required by the Dodd-Frank Act is also looked upon with disfavor by issuer panelists. Certain investor panelists did not see much value in the disclosure because of the lack of comparability among issuers. However, some investor panelists saw potential value in tracking this ratio over time. Panelists generally considered the cost of preparing the disclosure as exceeding any benefit of the rule.
- Clawback rules. In 2022, the SEC adopted new executive compensation “clawback” rules,[5] fulfilling its 2010 mandate under Dodd-Frank. Notably, unlike many existing clawback policies that only apply to officers who actually engaged in fraud or misconduct related to financial statements and provide companies with some degree of discretion in determining when and whether to pursue enforcement, the Dodd-Frank clawback rules generally require (subject to very limited exceptions) companies to clawback compensation erroneously received by any executive officer in connection with any “Little r” restatements (i.e., financial restatements that are not deemed material errors and do not require a full restatement of previously issued financial statements), as well as “Big R” restatements (i.e., financial restatements that are deemed material errors and do require a full restatement of previously issued financial statements, as well as immediate Form 8-K disclosure to the effect that the previously issued financial statements can no longer be relied upon). These clawback rules were described by a panelist as a trainwreck waiting to happen, offering a hypothetical of an executive who has engaged in no misconduct who decides to resign and fight the company for loss of prior compensation rather than return the compensation under the clawback rules.
- XBRL. Certain investor panelists expressed an interest in XBRL tagging of the summary compensation table and supplemental compensation tables. The only proxy disclosures that currently require XBRL tagging are pay versus performance, equity grant policy disclosure, insider trading policy disclosure, and disclosure of a registrant’s action to recover erroneously awarded compensation.
- Say-on-pay. There was little appetite among panelists to change say-on-pay requirements, although it was noted that this requirement may distort compensation decision-making. Panelist indicated that say-on-pay generates some amount of investor engagement and can result in more thoughtful narrative compensation disclosure than might otherwise be produced. However, some panelists identified as a downside that say-on-pay drives companies to adopt the current “best practices” on executive compensation programs, even if aspects of such programs are ill-fitted to certain adopting companies. Proxy advisory firms’ voting guidelines tend to further drive adoption of one-size fits all compensation programs.
While the scope of potential executive compensation disclosure reform is unclear, we expect reform is coming.
[1] Executive Compensation Disclosure, Release No. 34-55009 (Dec. 22, 2006).
[2] Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376 (2010).
[3] Pay Versus Performance, Release No. 34-95607 (August 25, 2022).
[4] Pay Ratio Disclosure, Release No. 34-75610 (August 5, 2015).
[5] Listing Standards for Recovery of Erroneously Awarded Compensation, Release No. 34-96159 (October 26, 2022).