On April 29, 2015, the Securities and Exchange Commission (SEC) proposed a new rule under the Dodd-Frank Wall Street Reform and Consumer Protection Act that would require public companies to disclose the relationship between the compensation actually paid to certain key executives and the financial performance of the company, as measured by total shareholder return (TSR). This Client Alert summarizes the key features of the proposed rule. If the proposed rule is finalized during 2015, affected companies may be required to make the “pay-for-performance” disclosures as early as the 2016 proxy season.

Companies Subject to the Proposed Rule -

The proposed rule generally applies to all reporting companies other than foreign private issuers, registered investment companies and emerging growth companies. Smaller reporting companies are required to provide only three (as opposed to five) years of data and are not required to include peer group information or amounts related to pensions.