Following the close of business last Friday, the Securities and Exchange Commission (SEC) issued guidance in Compliance & Disclosure Interpretations (CD&Is) for those tasked with preparing Pay versus Performance (PVP) disclosures for soon-to-be-filed proxy statements. Many of these are specific to particular types of companies, such as those newly public, those changing their fiscal year or those emerging from bankruptcy. The guidance also explained how bonus pool plans are disclosed and how total shareholder return (TSR calculations) should focus on the peer group used for each single disclosure year.
The guidance also confirmed what many had correctly inferred regarding what measures can and cannot appear in the company-selected measure column, while clarifying what data must appear in the Net-Income column.
The guidance contained a few surprises, some more pleasant than others. Most notably to us, the SEC clarified the following:
We will keep you posted if the SEC issues additional guidance in this area, as interpretative questions remain on other aspects of the rule.