The additional rules, proposed on Wednesday, call for companies to disclose performance measures beyond total shareholder return and to list the five most important performance measures used to determine compensation actually paid to executives. It also asks whether companies should spell out whether pretax net income and net income would be useful additional financial metrics.
“If adopted, this proposed rule would strengthen the transparency and quality of executive compensation disclosure,” said SEC Chair Gary Gensler in a statement. “The Commission has long recognized the value of information on executive compensation to investors. In 2015, the Commission proposed rules to implement the Dodd-Frank Act’s ‘pay versus performance’ requirement. In this reopening release, we are considering whether additional performance metrics would better reflect Congress’s intention in the Dodd-Frank Act and would provide shareholders with information they need to evaluate a company’s executive compensation policies.”
This reopening in part is due to certain developments since 2015 when the proposing release was issued, including developments in executive compensation practices, the SEC said. The reopened comment period permits interested parties to submit further comments and data on the rule amendments the Commission first proposed in 2015 and welcomes comments in response to certain changes from the 2015 proposal that the Commission is considering, as well as additional questions being raised by the SEC in its reopening release.
The public comment period will remain open for 30 days once the proposal is officially published in the Federal Register, which should take place in the next week or two. 
Joseph McCafferty is editor & publisher of Compliance Chief 360°