SEC moves to shrink executive pay disclosures

What would change

The SEC on Friday proposed narrowing what public companies must reveal about executive compensation. Firms would detail pay for only two senior officers, a shift from the current five-person requirement that, at most companies, would cover the chief executive and the finance chief.

Perks would see a big rewrite. The reporting bar would jump to $150,000 from $10,000, and companies could determine whether security spending is treated as a perk. In a press briefing, an SEC official said the commission understands perk disclosures can signal problems to investors, but it would allow "good faith" judgments on what gets reported.

The package would trim disclosures around compensation clawback policies and streamline pay versus performance by dropping the "compensation actually paid" calculation in favor of total compensation earned, a metric the agency labeled "complex." Pay ratio reporting would also be recut to cover only full time, US-based workers; today's rules sweep in all employees, including overseas, seasonal and part time staff, which is material for sectors like manufacturing and retail.

Why the SEC says it is making the change

"Today's amendments aim to reduce compliance burdens for companies while remaining faithful to the congressional mandate," SEC Chairman Paul Atkins said. He has long argued the current regime is a "Frankenstein patchwork of rules," and added that the broader goal is to cut disclosures that matter only to a narrow audience and refocus on what a "reasonable investor" wants. The agency also said the amendments would lower burdens where investor benefit is not commensurate and give registrants more flexibility to present pay the way programs actually work and as boards and compensation committees intend.

Atkins has criticized ballooning disclosure length for adding costs without matching investor benefit. In its economic analysis, the SEC estimated companies would save an average of $244,000 per year from reduced disclosure demands. The timing overlaps with the Trump administration's effort to significantly reshape the disclosure framework that has long defined US markets.

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Pushback and perk math

Skeptics are lining up. Benjamin Schiffrin, Better Markets' director of securities policy, said, "The SEC's proposed changes will deprive investors of essential information about company management." Expect resistance from activist hedge funds, large asset managers and retail investors who use these data in investment decisions.

Others welcome the shift. Ani Huang, the Chief Human Resource Officers Association's president of policy and practice, called it "in many ways, a complete overhaul of the bloated executive compensation regime we've developed over the last 10 to 15 years," arguing it better balances investors' need to understand total pay with companies' desire for simpler filings.

Perks are a small slice of pay - typically 2% to 5% of an executive's package - yet messy to value. ISS-Corporate said 286 Russell 3000 companies reported at least one perk above $150,000 for amounts mostly tied to fiscal 2025, with some off-cycle filers included, while 1,142 disclosed perks over $10,000 for the same period.

Timeline and what to watch for portfolios

Next up is a 60-day comment period. After reviewing feedback, the SEC would draft a final rule that would still need a vote of the commission before it takes effect. Historically, SEC rulemaking has typically taken 12 to 18 months.

The bottom line: if adopted as proposed, investors would get fewer datapoints on executive pay structure, perk spend and the linkage between performance and pay, and the pay ratio would reflect only full time US employees. That narrows one lens into management incentives, so watch the comments, the final text, and how companies use "good faith" leeway on perks - those choices will shape how clear your next proxy read actually is.

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