SEC’s pay vs performance rule was first proposed back in 2015 – and after struggling for a number of years to make any progress, it was finally reopened in January 2022 and officially adopted in August 2022 in a 3-2 vote.
In broad terms, the ruling requires companies to disclose executive compensation payments and actual company financial performance.
However, it’s a lot more complex than it sounds and it’s expected that many issuers will have to spend a significant amount of time on their filings.
In our latest episode, we aim to dig deep into Pay versus Performance so our listeners can have a clear understanding of what is expected of them when they are preparing their proxy statements.
What we cover
- 03:30 – Profitability and implementation timelines
- 05:31 – The new Pay vs Performance table
- 07:28 – Compensation actually paid vs summary compensation numbers
- 12:09 – Fair value vs. Intrinsic value.
- 15:46 – What’s next for the new reporting rules?
- 18:02 – A better understanding of the time frame.
- 20:01 – How the new pay vs performance rules impact executive pay
Ep 12. Taking the Pain Out of the Pay vs Performance Rule
About our guest
Terry Adamson is a Partner with Infinite Equity and a Fellow of Global Equity (FGE).
Terry began his love affair with stock-based compensation over 20 years ago applying actuarial disciplines to minimize the accounting cost of employee equity under ASC718, while also maximizing the perceived value to participants. Terry became one of the premiere experts on Performance Share programs and gained the nickname “Mr. Relative TSR”. Terry continues to focus on performance equity, and the mission to tighten the alignment between pay and performance.
Terry is very active in the equity community and has formerly served on the FASB Round Table on Employee Share Options and on the Executive Advisory Committee of the NASPP. Terry currently serves as the Chairperson of the Advisory Board of the Certified Equity Professional Institute (CEP) and the Society of Actuaries taskforce on stock option valuation.
Contact and more information
Information provided in this podcast is intended for informational and educational purposes only. Guests on the Own Up podcast may not be affiliated with JP Morgan Chase & Co. The podcast contains the views of a JP Morgan employee, which may differ from the views of JP Morgan Chase & Co., its affiliates and employees. The views and strategies described may not be appropriate for everyone. Certain information was obtained from sources we believe are reliable, but we cannot verify the accuracy of the content and we accept no responsibility for any direct or consequential losses arising from its use. You should carefully consider your needs and objectives before making any decisions. For specific guidance on how this information should be applied to your situation, you should consult a qualified professional.