US companies will be required to disclose information reflecting the relationship between executive compensation and the financial performance.
The US SEC (Securities and Exchange Commission) has adopted amendments which will require US companies to disclose information reflecting the relationship between executive compensation and financial performance.
The company will need to report its total shareholder return (TSR), the TSR of companies in its peer group, its net income and three to seven financial performance measures (KPIs) chosen by the company.
The so-called ‘Pay Versus Performance’ rule was first proposed in 2018 and was re-opened in January of this year.
Companies must begin to comply with these new disclosure requirements in their proxy and information statements for fiscal years ending on or after 16 December.
“The Commission has long recognised the value to investors of information on executive compensation,” SEC Chair Gary Gensler said.
“Building upon [a] long tradition of disclosure, today’s rule makes it easier for shareholders to assess a public company’s decision-making with respect to its executive compensation policies.”
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