The Securities and Exchange Commission (SEC) held its Roundtable on the executive compensation disclosure requirements at its headquarters in Washington, DC on June 26, 2025.
Chairman Paul S. Atkins set the tone in his introductory remarks by referring to the current SEC executive compensation disclosure requirements as a “Frankenstein” patchwork of rules, which had evolved over more than three decades. He noted that the Roundtable would be the first of several steps that the SEC would undertake to evaluate whether the SEC’s objectives – such as ensuring that investors receive accurate and timely information – are met by the current disclosure regime. He noted that such objectives are not met when issuers have to engage outside specialists to help draft disclosures that investors do not consider informative. Chairman Atkin’s comments were echoed by two of the SEC commissioners, Hester Peirce and Mark Uyeda, who referred to the current SEC disclosure requirements as increasingly complex, expensive, time-consuming, and not responsive to investor concerns. These same concerns were repeated by the issuer representatives on the speaker panels that followed.
The panels of speakers included representatives from several large issuers from various industries. The speaker panels also included representatives from large institutional investors, as well as legal and other executive compensation specialist service providers. The different panels discussed the executive compensation decision making process, whether the current SEC disclosure rules were improperly influencing or driving compensation decisions, the deficiencies of the current rules, and how they could potentially be improved.
Issuer representatives criticized the disclosure requirements as overly burdensome and time-consuming, particularly with respect to the CEO pay ratio and pay versus performance disclosures, to which, they stated, investors were not paying any attention. One issuer representative noted that preparing their initial pay versus performance disclosure took them 20-times longer than the SEC’s estimated 15 hours, and that the issuer did not receive one question from any investor regarding the disclosure. Issuers also objected to the executive perquisite disclosure requirements given the relative cost to issuers. There was also widespread criticism regarding the disclosure requirement that costs of providing executive personal security be included in the summary compensation table disclosure as “compensation.”
As a counterpoint, several investor representatives noted that they were not advocating for less executive compensation disclosure, but rather better disclosure. Some investors suggested several types of additional or supplemental disclosures that would make it easier for them to follow the lifecycle of executive equity awards and the actual value realized by executives. One investor representative defended disclosure of perquisites in the summary compensation table as providing useful information to investors on whether there was a potential power imbalance between the named executive officers and the board of directors. Another investor representative noted that while the current disclosure rules were imperfect, investors have learned to operate within them and evaluate an issuer’s compensation practices within the current disclosure regime, and that not all investors use the executive compensation disclosures similarly as part of their evaluation process.
While this Roundtable was the first of SEC’s multi-step plan of evaluating whether the existing executive compensation rules meet the rules’ objectives, it appears likely that the SEC will propose amendments that would meaningfully scale back the current disclosure requirements, including amendments that would modify to some degree, or eliminate altogether, CEO pay ratio and pay versus performance disclosures. It remains to be seen how extensive the changes to the executive compensation disclosure will be.
[View source.]
