Council of Institutional Investors

Council Makes Recommendation to SEC on Pay-for-Performance Disclosure
Thursday, August 7, 2014
by: Rosemary Lally

Section: CII Governance Alert

CII sent a letter August 6 to the director of the SEC’s Division of Corporation Finance, Keith Higgins, providing recommendations on the implementation of Section 953 (a) of the Dodd Frank Act. That provision in the act requires companies to disclose the relationship between their executives’ compensation actually paid and their financial performance, taking into account any changes in the value of the shares of stock and dividends.

The letter included the following specific recommendations to the SEC for implementation of that portion of the act:

• Do not make changes to the existing Summary Compensation Table.
• Provide a graphic representation of pay for performance for the CEO individually and the named executive officers in the aggregate.
• Provide, at a minimum, a five-year comparison of executive compensation to performance.
• The required disclosure, at a minimum, should compare executive compensation to total shareholder return.
• Disclosure about executive compensation actually paid should not exclude any components of pay.
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