By Cydney Posner
This article in the WSJ, SEC Urges Caution Over New Pay Disclosures, serves as a follow-up to the News Brief reporting on alternative methods of compensation disclosure in proxy statements. The article reports that, at a PLI conference in NYC, an SEC representative cautioned that companies using new measures of executive pay, such as "realized" or "realizable pay," should be careful not to mislead investors.
The article observes that one problem with these types of measures is that they are not comparable across companies (because each company develops its own definitions). However, the SEC representative confirmed the speculation in the News Brief that the SEC would address the lack of comparability when it develops a definition for compensation that has been "actually paid," as required under Dodd-Frank rule. No timeline exists for the proposal. Until that proposal is released, the SEC representative urged, companies should "be cautious that investors understand the disclosures properly….Until we have come out with a rule proposal as to what realized pay means under 953(a) [of the Dodd-Frank Act] I don't think there is a definition for that purpose….I think what companies need to be considering if they are making a disclosure that is not yet required, is that it not be misleading."