SEC Considering New Proxy Disclosure Rules on Executive Compensation

SEC Chairman Mary Schapiro announced Wednesday that the commission is considering a package of new proxy disclosure rules that would provide more information to investors on public companies’ compensation decisions.

“At the SEC, our role has not been to set pay scales or cap compensation,” said Schapiro in a news release. “Our role is to protect investors by ensuring that they have the information needed to make sound investment decisions, whether those decisions impact proxy voting or a decision to buy or sell a stock.”

Schapiro further explained that the commission has frequently revised its disclosure rules over the years to keep pace with new developments in compensation practices. The new proposals, which have yet to be released, would provide additional disclosure about how a company manages risks; its overall compensation approach and incentive structures that reward short-term risk taking; potential conflicts of interest by compensation consultants; the qualifications of director nominees; and why a board has chosen its leadership structure.