Key takeaways

• The proposed rule would require registrants to provide a clear description of the relationship between “executive compensation actually paid” and the registrant’s “financial performance,” measured by the registrant’s cumulative total shareholder return (TSR), and the TSR of a peer group.
• Compensation actually paid, which is distinct from the compensation reported on the Summary Compensation Table, is calculated by modifying the compensation reflected in the Summary Compensation Table to reflect only the fair value of equity awards at vesting and to adjust the amounts included for pension benefits.
• Disclosure would be required only in a registrant’s proxy or information statement (not in a registrant’s Form 10-K or registration statement) and would be phased in over a one to two year transition period depending on the registrant’s size. Emerging growth companies, foreign private issuers and registered investment companies are exempt from the requirements.