On August 25, 2022, the Securities and Exchange Commission (SEC) finalized its long-delayed pay versus performance disclosure rule, as required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The final rule requires public companies (with certain exceptions) to describe the relationship between the compensation “actually paid” to their named executive officers (NEOs) and the financial performance of the company, generally over a five-year period. The rule is effective for proxy and information statements for fiscal years ending on or after December 16, 2022 and will be implemented through a new Item 402(v) of Regulation S-K.
In this Alert, we describe the scope and application of the final rule.
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