Gary Gensler is Chair of the U.S. Securities and Exchange Commission. This post is based on his recent public statement. The views expressed in this post are those of Chair Gensler, and do not necessarily reflect those of the Securities and Exchange Commission or the Staff.
Today, the Commission voted to adopt a rule requiring certain public companies to disclose information regarding their executives’ compensation and how such compensation relates to the company’s financial performance. I was pleased to support this rule—so-called “pay versus performance”—because it will strengthen the transparency and quality of executive compensation disclosure to investors.
In 2010, Congress under the Dodd-Frank Act directed the Commission to provide clear disclosure to investors on the relationship between companies’ executive compensation actually paid and financial performance. We proposed a rule in 2015 to implement this provision and reopened the proposal in January of this year. With this adoption, the Commission today has fulfilled Congress’s mandate.
The Commission has long recognized the value to investors of information on executive compensation. The first requirements for disclosures on executive compensation originated in the Securities Act of 1933. [1] Since then, the Commission from time to time has continued to update compensation disclosure requirements.
Building upon this long tradition of disclosure, today’s rule makes it easier for shareholders to assess a public company’s decision-making with respect to its executive compensation policies.