SEC Proposes Major Reform of Executive Compensation Disclosures
The SEC proposed major amendments to executive compensation disclosure rules on Nov 13, 2026.
Why it matters: This overhaul will affect corporate legal and compliance teams by simplifying disclosures while focusing on material pay practices. Public companies must prepare for significant shifts in executive compensation reporting and proxy requirements.
- Limits named executive officers reported to principal executive and financial officers, reducing from five or more to two.
- Introduces three new compensation tables: Earned Compensation, Granted Compensation, and Status of Equity Awards.
- Raises the perquisites reporting threshold from $10,000 to $150,000 with a new de minimis exclusion.
- Shifts the Compensation Discussion and Analysis to a principles-based approach focusing on three topics, dropping the current 15 example topics.
On November 13, 2026, the U.S. Securities and Exchange Commission (SEC) unveiled proposed amendments to Item 402 of Regulation S-K, aiming to overhaul executive and director compensation disclosure requirements. The changes seek to make disclosures more principles-based and materiality-driven, directly addressing concerns about the complexity and cost of current requirements.
The proposal significantly narrows the group of named executive officers to just the principal executive officer (PEO) and principal financial officer (PFO), compared to the typical five or more now disclosed. This aims to streamline reporting while maintaining relevant investor insights.
Replacing the current four primary compensation tables, the proposal introduces three new ones: the Earned Compensation Table, the Granted Compensation Table, and the Status of Equity Awards Table. These are designed to better capture and clarify compensation data.
The minimum aggregate reporting threshold for perquisites jumps from $10,000 to $150,000, with an additional de minimis exclusion to reduce unnecessary disclosures of minor benefits.
The Compensation Discussion and Analysis (CD&A) section will transition to a principles-based format. Registrants will address only three key topics, with the existing list of 15 example topics eliminated. This change is expected to focus disclosures on material information.
Additionally, the pay-versus-performance disclosures will be simplified by cutting the number of required performance measures and substituting the complicated 'Compensation Actually Paid' metric with the total compensation earned amount from the Earned Compensation Table.
The rule modifies the pay ratio disclosure by limiting the 'median employee' population to U.S. full-time employees and reducing the frequency of determination to once every five years.
SEC Chairman Paul S. Atkins said these reforms are "central tenets of my agenda and focus on transforming the SEC's public company disclosure regime to one rooted in materiality." Commissioner Mark T. Uyeda added the current rules "have increased cost and duplicative disclosure without adding meaningful investment insights."
The 60-day public comment period will begin following publication in the Federal Register, inviting stakeholders to weigh in.
By the numbers:
- 2 — named executive officers reported, down from 5 or more
- $150,000 — new minimum threshold for reporting perquisites, up from $10,000
- 5 years — frequency for determining median employee under pay ratio rule
Yes, but: While simplifying disclosures may reduce compliance costs and complexity, investors might receive less detailed information on executive pay across the broader leadership team, potentially impacting investment decisions.
What's next: The SEC's 60-day public comment period will start after Federal Register publication, guiding potential adjustments before finalizing the rule.