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, and aligned with long-term value creation. Further, we must leverage newer technologies that have emerged over the last 30+ years.

This article outlines five practical ideas to reshape and simplify executive compensation disclosure. They aim to inspire a broader conversation about what compensation disclosure should achieve in a modern, stakeholder-aware capital market.

1. Reframing Compensation Actually Paid, TSRs, and the CEO Pay Ratio into the SCT – Consolidates key elements of the Summary Compensation Table, Pay versus Performance Table disclosure, and the 10-K Performance Graph providing an improved view of executive compensation and performance.
2. Reframing Stock Vesting, Option Exercises and Compensation Actually Paid into the Outstanding Equity Table – Consolidates key elements of the Outstanding Equity Awards at Fiscal Year-End Table, the Options Exercised and Stock Vested Table, and the Pay versus Performance Table Disclosure that provides an improved view of equity awards from grant to vesting and exercise.
3. Revisiting the Termination & Change-In-Control Disclosure – Reviews potential revisions to Item 402(j) of Regulation S-K: Potential payments upon termination or change-in-control.
4. Rightsizing the Number of NEOs – Proposes a modernization of executive compensation disclosure by moving from five Named Executive Officers to three.
5. Leveraging Modern Technologies – Proposes utilizing contemporary technologies – hyperlinks and XBRL tags – in executive compensation disclosures.

The regulatory framework around executive pay disclosure should do more than enforce compliance—it should enable insight and serve as a catalyst for telling a human capital narrative.  

As stakeholders across the market gather at the SEC Round Table, now is the moment to think boldly about what comes next.