SEC Proposal on New Pay versus Performance Disclosure Rules

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The United States Securities and Exchange Commission (SEC) has proposed a rule that would require new Pay versus Performance disclosure. The new disclosure would include specific information showing the relationship between executive compensation “actually paid” and financial performance of the registrant as compared to peer group. All public companies (other than emerging growth companies, foreign private issuers and registered investment companies) would be covered by the proposed rules.

The key take-away is that covered companies would not be allowed to use their existing pay for performance disclosure approaches to meet the requirements under the proposed rule. Instead, covered issuers would be required to include a new Pay Versus Performance Table.

As a result, it is appropriate for covered issuers to start considering what the new Pay Versus Performance table would look like for prior years and what disclosure approaches to describe the pay for performance relationship might work best if the proposed rule is finalized in its current form.

Educational Objectives:
• How “pay” will be calculated for purposes of the proposed new table and what new data will need to be prepared?
• How performance and total shareholder return (TSR) will be reported not just the issuer but for the required “peer group”?
• What transition rules apply?
• Whether issuers can provide supplemental pay for performance information to address potential shareholder concerns about any perceived disconnect between pay and performance? 
• What are some of the key unresolved issues?

Who would benefit most from attending this program?
• Lawyers specializing in securities, employee benefits and executive compensation who work on either drafting executive compensation arrangements and/or how those executive compensation arrangements are described in the proxy.
• Senior HR executives who are responsible for designing executive compensation programs
• Independent directors serving on Compensation Committees of public company boards of Directors

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Andrew C. Liazos, Partner, McDermott Will & Emery

Andrew Liazos is a partner at McDermott Will & Emery and heads the Boston Employee Benefits Practice and co-heads the Firm’s Executive Compensation Group.  Andrew regularly represents Fortune 500 companies, public companies, large closely held businesses and compensation committees on all aspects of executive compensation, ERISA fiduciary and compensation plan governance, employee benefits in business transactions, initial public offerings and bankruptcy, international compensation planning and related litigation matters. He also counsels executives in employment agreement and joint venture negotiations.

Andrew received his J.D. from Suffolk University Law School.

Joseph S. Adams, Partner, McDermott Will & Emery

Joseph Adams is a partner in McDermott Will & Emery’s Chicago office where he co-heads the Firm’s Executive Compensation Group.  Joe focuses his practice exclusively on employee benefits and executive compensation matters for both public and private entities and for certain executives.

Joe received his J.D. from Cornell Law School where he served as an editor of the Cornell Law Review.