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New SEC staff C&DIs on pay vs performance disclosures

Defining Issues | December 2023

New C&DIs, plus some revisions, provide further guidance about the new disclosure requirements

Man reading Steps

The SEC issued its final rule that amends Regulation S-K to require listed companies to disclose the relationship between executive compensation and certain measures of financial performance of the registrant for the five most recent fiscal years (phased in over the first three years and scaled for SRCs).

Update: On November 21, 2023, the SEC staff released additional and revised certain Compliance & Disclosure Interpretations (C&DIs) covering implementation and practical questions related to the new pay versus performance disclosure requirements – including topics related to equity awards and vesting conditions, determination of the peer group and named executive officers, and changes in issuer status.


  • Public companies (exceptions for foreign private issuers, emerging growth companies and registered investment companies)

Relevant dates

  • The final rule became effective October 11, 2022.
  • Compliance with the final rule is required in proxy and information statements that require executive compensation disclosures (under Item 402) for fiscal years ending on or after December 16, 2022. 

Key impacts

The final rule requires executive compensation information to be presented alongside four specific financial performance measures (FPMs) in a tabular format (called the ‘PvP table’) for each of the five most recent years. 

In addition to the PvP table, the rule requires disclosure of the relationship between executive compensation actually paid and the FPMs, and a tabular list of the three to seven most important FPMs used by a registrant to link executive compensation actually paid to company performance for the most recently completed fiscal year.

The PvP table

  • Requires disclosure of total compensation as reported in the Summary Compensation Table (SCT), compensation actually paid, and four specific financial performance measures.
  • Executive compensation to be included in the disclosures is for the principal executive officer (PEO) and for the non-PEO named executive officers (NEOs) as an average.
  • The determination of compensation actually paid requires various adjustments to the amounts included in the SCT; for example,  inclusion of the service costs portion of pension benefits and the annual change in fair value of equity awards during the vesting period.
  • The four financial performance measures are the registrant’s total shareholder return (TSR), peer group TSR, net income, and the most important company-specific performance measure (CSM).

Other disclosures

  • Requires description in narrative or graphical format of the relationship between executive compensation actually paid and (i) the registrant’s TSR, (ii) net income and (iii) the CSM, as well as between the registrant’s TSR and the peer group TSR.
  • Requires a tabular list of the three to seven FPMs that the registrant determines are its most important measures. A registrant is permitted, but not required, to include nonfinancial measures in the list.
  • Companies may need to update systems or work with external advisors to capture the new information required under the final rule.


The C&DIs issued by the SEC staff cover matters of general applicability (C&DI 128D.01) and various specific implementation topics, including:

  • Guidance on the presentation of amounts in the PvP table and accompanying footnote disclosures. [C&DI 118.08, 128D.03, 128D.04, 128D.12, 128D.13, 128D.22, 228D.01, 228D.02]
  • Calculation of compensation actually paid, including adjustments necessary for equity awards and related vesting conditions. [C&DI 128D.02, 128D.14, 128D.15, 128D.16, 128D.17, 128D.18, 128D.19]
  • Clarifications related to fair value methodologies. [C&DI 128D.20, 128D.21]
  • Calculation and presentation of registrant’s and peer group TSR and determination of the peer group. [C&DI 128D.05, 128D.06, 128D.07]
  • Clarifications related to the determination and presentation of the Company’s selected performance measure. [C&DI 128D.09, 128D.10, 128D.11]
  • Clarification that the net income performance measure in the PvP table is net income from the audited GAAP financial statements and that other income amounts (e.g. net income attributable to controlling interests, net income from continuing operations) may not be used. [C&DI 128D.08]

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SEC adopts rule

Pay vs performance disclosures

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