Five Practical Improvements for Modernizing Executive Compensation Disclosure
As the SEC prepares to host its upcoming roundtable on Executive Compensation Disclosure Requirements on June 26th, it is a perfect time to reimagine how companies disclose pay practices in a way that better serves investors, boards, and the public. Compensation design has become increasingly complex, and disclosures must evolve to be more transparent, comparable,…
Reframing Compensation Actually Paid, TSRs, and the CEO Pay Ratio into the SCT
In the first installment of Infinite Equity’s Five Practical Improvements for Modernizing Executive Compensation Disclosure, we explore combining the Summary Compensation Table with the Pay versus Performance Table Disclosure, CEO Pay Ratio, and 10-K Performance Graph. The traditional approach to equity compensation reporting is outdated and fragmented – the four independent tables create confusion and…
Reframing Stock Vesting, Option Exercises, and Compensation Actually Paid into the Outstanding Equity Table
In the second installment of Infinite Equity’s Five Practical Improvements for Modernizing Executive Compensation Disclosure, we recommend streamlining three important and useful tables to get a better overview of compensation. The three independent tables in consideration are — the Outstanding Equity Awards at Fiscal Year-End Table, the Options Exercised and Stock Vested Table, and the…
Revisiting the Termination & Change-In-Control Disclosure
In the third installment of Infinite Equity’s Five Practical Improvements for Modernizing Executive Compensation Disclosure, we review potential revisions to Item 402(j) of Regulation S-K: Potential payments upon termination or change-in-control. Background Item 402(j) of Regulation S-K requires that companies describe, explain, and estimate the specific payments that a Named Executive Officer would receive in…
Rightsizing the Number of NEOs: Why Less is More
This position paper proposes a modernization of the SEC’s executive compensation disclosure requirements by limiting the number of Named Executive Officers (NEOs) disclosed in proxy statements to three roles: Chief Executive Officer (CEO), Chief Financial Officer (CFO), and the single highest paid executive. The current requirement to disclose the CEO, CFO, and the next three…
Leveraging Modern Technologies
In the final installment of Infinite Equity’s Five Practical Improvements for Modernizing Executive Compensation Disclosure, we recommend utilizing contemporary technologies in Executive Compensation Disclosures. Infinite Equity has already proposed four significant changes to the Executive Compensation disclosure landscape: Alongside these streamlined disclosures, more modern tools could further enhance the value of this information for a…
Pay Versus Performance Disclosures: Potential Alternatives for “Compensation Actually Paid”
On June 26th, the SEC will be hosting roundtables focusing on executive compensation disclosures. One of the anticipated discussion points will be Pay versus Performance and the definition of “Compensation Actually Paid.” We believe this is a timely opportunity to revisit the strengths and weaknesses of alternative definitions of compensation. Pay versus Performance disclosure is…
Translating Compensation “Actually Paid” into Realizable Pay:
How to Not Only Comply with 402(v) but add Strategic Value
The SEC announced the adoption of new pay versus performance rules, or Item 402(v) on August 25, 2022. A detailed summary of the new rules can be found within our Alert found here. The biggest challenge of the rules is a new definition of pay called “Compensation Actually Paid” (“CAP”). Although the CAP calculation itself is new, the theory…
The Next Steps in Evaluating Executive Pay vs. Performance
The executive compensation disclosures mandated by the U.S. Securities and Exchange Commission (SEC) two years ago have been seen in many circles as another layer of expensive-to-produce paperwork that most investors don’t read. But our analysis of the S&P 500 points to relevant data and potentially a new way to benchmark compensation. In this paper,…
How to Make Sense of Pay vs. Performance Data
PvP data can be leveraged to assess whether executive compensation exceeds the market and how it aligns to the return realized by shareholders over that same period. In this publication, we share what you need to know about using the SEC’s new pay vs. performance disclosure to inform decisions about executive pay. As published in…
