The SEC has issued final rules requiring reporting companies to explain their executive pay regime to shareholders; there are two tiers of disclosure, with greater detail sought from larger registered companies.

Why does this not seem like “news”?  Because twelve years ago Congress required the SEC to issue such rules, and seven years ago draft rules were promulgated that had substantial impact on how public companies in fact addressed comp disclosure.

The final version of the rules is substantially similar in general import to the interim version, seeking information on how pay is conceptualized based on corporate performance.  Companies need to list performance factors they consider (but need not rank them in importance), including shareholder return, net income or any other criterion the company chooses.  In a bow to ESG and emerging definitions of the role of corporations in society, criteria which are not economic are expressly solicited.

Finally, there is no escape from partisanship on the Commission; it is almost a knee-jerk.  The approval vote was split 3-2 along party lines, with the Republican members complaining that the SEC should have updated its economic analysis supporting the rule rather than relying on a seven-year-old statement.  While something can be said about this point, given the fact that we have been living with a very similar version of the final rule for seven years and given the fact that tweaks to the original promulgation were made in response to prior comment from the public, it is hard to conclude that the critique of the Commission’s action is of great substance.