Game Theory Experiment

They can say less. Will they?

The SEC's proposed rule change would let roughly 81% of public companies scale back their executive compensation disclosures. Having the option and using it aren't the same thing. Predict how nine company cohorts will actually respond.

The SEC has proposed raising the Large Accelerated Filer public-float threshold from $700 million to $2 billion. The SEC estimates that approximately 81% of public companies would be classified as Non-Accelerated Filers (NAFs) under the proposal. 

For NAFs, the proposal would significantly reduce required executive compensation disclosures and eliminate certain existing requirements, creating substantially more flexibility for companies to determine what compensation information is relevant to investors.

Just because a company can provide less disclosure, will it?

Assume the SEC proposal is adopted substantially as proposed. Based on your experience and expectations, how do you think companies in each of the following cohorts will approach their executive compensation disclosures?

For each cohort, select the approach you believe is most likely:

  • Non-Accelerated Filer (NAF) Approach: Likely to embrace the new scaled-back, principles-based disclosure
  • Large Accelerated Filer (LAF) Approach: Likely to continue providing robust disclosure similar to actual Large Accelerated Filer's
  • To Be Determined (TBD): Too many variables to predict how the company will respond
EC Disclosure Game Theory Experiment — Questions
Category A
Category B
Category C
<$2 Billion Float(no realistic expectation of exceeding that)
<$2 Billion Float(could potentially exceed $2B)
>$2 Billion Float
Category 1< 5 Years of being public
(Limited historical executive compensation disclosure processes)
Category A<$2 Billion Float (no realistic expectation of exceeding that)
Category B<$2 Billion Float (could potentially exceed $2B)
Category C>$2 Billion Float
Category 2< 5 Years of being public
(Established executive compensation disclosure processes)
Category A<$2 Billion Float (no realistic expectation of exceeding that)
Category B<$2 Billion Float (could potentially exceed $2B)
Category C>$2 Billion Float
Category 3> 5 Years of being public
Category A<$2 Billion Float (no realistic expectation of exceeding that)
Category B<$2 Billion Float (could potentially exceed $2B)
Category C>$2 Billion Float
LAF Approach
Already a Large Accelerated Filer today. No choice available under either rule.
Proposed Non-Accelerated Filer
Proposed Large Accelerated Filer