![Glock gen 4 ejector](https://loka.nahovitsyn.com/130.jpg)
![proxie pay proxie pay](https://i.pinimg.com/originals/d2/ed/8a/d2ed8aabda7d49e822e62bd56902811b.png)
The new SEC table is quite similar to the comparisons of pay and TSR which Institutional Shareholder Services (ISS) currently uses in its CEO pay and 5-year absolute TSR graph, the CEO relative degree of alignment test and the disclosure of other NEO compensation. The Role of Absolute and/or Relative TSR in the Design of Equity-Based, Long-Term Incentives While not possible to address all the potential permutations in this alert, the new table will force companies to better describe and justify the decisions of compensation committees.
![proxie pay proxie pay](https://www.malaysiainternet.my/wp-content/uploads/2019/10/Permanent-Proxy-enables-Wear-OS-Google-Pay-in-unlisted-countries.jpg)
Conversely, where actual pay is high while TSR is low, but operational results are positive, a company may want to explain that while TSR is low, compensation decisions were driven by operational performance which is weighted more heavily than TSR. In addition, if actual pay levels are high while TSR is also high, a company may want to justify the higher pay levels based on the level of shareholder return. For example, where actual pay is lower than SCT compensation, a company may want to explain how and why the pay they actually deliver is less than what is reflected in the SCT. The proposed new table and its focus on the new disclosure concepts of actual pay and TSR will force companies to enhance their CD&A disclosure to explain the role of actual pay and TSR in their decision making.
Proxie pay full#
* 100% reflects the break-even point for TSR and full satisfaction of target operational goals Even though the proposed rules provide for a two-year phase-in period, the table includes the full five years of compensation and TSR for illustration purposes. Set forth below is the new table which will be required to be included in a non-exempt, large public issuer's proxy statement based on the proposed rules, which has been populated using hypothetical numbers. We have provided sample charts below which companies may consider using in their proxy statements to satisfy these new proposed disclosure rules (if adopted). There will inevitably be some narrative description, but as a best practice, we think the use of charts will tell a better story and be easier for shareholders to visualize and understand and thus, should be used to help illustrate the narrative description. The proposed rules give flexibility to describe these relationships in either narrative or graph form (or both).
![proxie pay proxie pay](https://www.capartners.com/wp-content/uploads/2017/01/CAPintel-18-03-13-exhibit.png)
While numerous other writings have focused on the technical requirements of the proposed rules, this alert focuses on the new "pay for performance" table which would be required to be included in a company's proxy statement and best practices to address the additional requirement of a description of (i) the relationship between executive compensation actually paid versus the company's TSR and (ii) the relationship between the company's TSR versus the TSR of its peer group. This new "pay for performance" rule requires companies1 to disclose the relationship between the actual compensation paid to their named executive officers and the company's financial performance as measured by total shareholder return (TSR). The SEC recently released its proposed "pay for performance" rules under one of the last remaining executive compensation requirements mandated by the Dodd-Frank Act.
![Glock gen 4 ejector](https://loka.nahovitsyn.com/130.jpg)