SEC proposes executive compensation disclosure reforms, plans to cut the number of executives whose pay must be disclosed from 5 to 2
The U.S. Securities and Exchange Commission (SEC) on Friday proposed a rule amendment that would revise Item 402 of Regulation S-K and reduce the number of “named executive officers” whose compensation must be disclosed from the usual 5 or more to 2, in most cases including only the principal executive officer and the principal financial officer.
The proposal also plans to raise the disclosure threshold for additional benefits such as security and private travel (perquisites) from $10,000 to $150,000 and introduce a new minimum tracking exclusion provision. In pay-versus-performance disclosure, the proposal would eliminate the complex calculation of “Compensation Actually Paid” and instead use total compensation data from the proposed “Earned Compensation Table,” while reducing the required performance metrics.
SEC Chairman Paul S. Atkins said the proposal aims to simplify disclosure in a materiality-oriented way and reduce corporate compliance costs, while believing that some current requirements do not provide investors with corresponding benefits. The proposal is currently in the comment period, and the public comment period will last 60 days after publication in the Federal Register.
Original source:
Title: Statement on Proposing Release for Executive Compensation Disclosure Reform
Publisher: SEC (Paul S. Atkins, Chairman)
Date of publication: 2026-11-13
URL: sec.gov/newsroom/speeches-statements/atkins-statement-proposing-release-executive-compensation-disclosure-reform-111326
Nature of source: official statement
Verification status: the full statement was actually read for this report
Supporting content: the proposal revises Item 402; focuses on materiality and reducing compliance costs; simplifies disclosure while retaining congressionally mandated requirements; based on comments from the 2025 roundtable
ABAB AI Insight
SEC proposed a comprehensive reform of Regulation S-K Item 402 on 2026-11-13. This is the first systematic adjustment to the executive compensation disclosure framework since the broad 2006 revisions. Chairman Atkins framed the proposal as the second stage of his public company disclosure reform agenda, following the simplification proposal for filer status introduced in May 2026.
The proposal narrows the scope of named executive officers to the chief executive officer and chief financial officer, mainly on the basis that these two roles have the most critical managerial responsibilities for material corporate matters and that their compensation information is usually the most important to reasonable investors. The perquisite disclosure threshold would rise from $10,000 to $150,000, and companies would be allowed to use reasonable and good-faith judgment in determining whether certain benefits constitute a reportable perquisite.
In pay-versus-performance disclosure, the proposal eliminates the complex calculation of “Compensation Actually Paid” and instead uses the total amount from the Earned Compensation Table, while reducing mandatory performance metrics. The SEC said these adjustments would reduce the burden on companies in data collection and calculation while satisfying the statutory requirements of the Dodd-Frank Act.
The proposal remains in the comment stage and has not become a final rule. If ultimately adopted, it would change the compensation tables and narrative disclosures that listed companies must provide in proxy statements, but the specific impact will depend on the final text and on how companies implement principle-based disclosure.
ABAB News · Law of Cognition
- The SEC proposal would reduce the scope of named executive officer disclosure from the usual 5 or more people to the chief executive officer and chief financial officer.
- The perquisite disclosure threshold would be raised from $10,000 to $150,000.
- The proposal plans to eliminate the complex calculation of “Compensation Actually Paid” and use Earned Compensation Table data instead.