Creating Effective Disclosures, Requirements & SEC Compliance
Executive Compensation Disclosures
The compensation disclosure consultants at NFP Compensation Consulting help company leadership report effective executive compensation disclosures through comprehensive advisory, disclosure review, and annual disclosure analysis. Headquartered in Houston, Texas, we offer consulting services throughout the Southwestern United States. Contact NFPCC to see how we can help ensure your disclosure statements align with the SEC’s guidelines and requirements.
Executive Compensation Disclosure Requirements
The SEC requires public companies to clearly and concisely disclose compensation paid to CEOs and other high-ranking executives in their organizations. This information is typically found in the company’s annual proxy statement, the annual report on Form 10-K, and in filed registration statements for public sales of securities.
Important Elements for SEC Disclosure
The three segments of executive compensation disclosures that our consulting firm highly recommends advisory services for include:
- Executive Compensation Proxy Statement
- Summary Compensation Table
- Compensations Discussion & Analysis »
Hiring third-party executive comp consultants like NFPCC means no conflict of interest, and more in-depth reporting and data analysis. We can help construct more effective, SEC compliant compensation disclosures.
A company’s proxy statement contains the most comprehensive data regarding executive pay. In the proxy statement, companies are required to disclose:
- The amount and type of compensation paid to its CEO, CFO and the three other highest paid executives
- The ratio of CEO compensation to the median compensation of its employees »
- Pay vs. performance disclosure explaining relationship between executive compensation and company performance »
- Practices used in determining this compensation
- How these compensation practices relate to corporate performance
These disclosures are included succinctly in the Summary Compensation Table and provide a complete overview of a company’s compensation practices in one place. The summary compensation is required by the SEC to serve as the main executive comp report index.
The CD&A (Compensation Discussion & Analysis) section of a proxy statement explains and support the Summary Compensation Table. It contains a more in-depth report explaining all the components of the organization’s executive compensation programs. In addition to disclosure advisory, we also provide CD&A consulting services for public companies.
Human Capital Management (HCM) Disclosure
Although this isn’t part of the executive compensation disclosures, it’s important to note the SEC’s amendment to Regulation S-K now requires public companies to disclose information regarding their human capital resources. In its first year of disclosures, the most commonly disclosed category focused on employee demographics. The SEC is looking for more quantitative, enhanced data in areas such as workforce turnover and retention, employee engagement and training, compensation, benefits, employee demographics including diversity, equity and inclusion, and health and safety. As a new requirement in its early years of disclosure, the data companies are presenting is expected to evolve and be refined over time, but the above-mentioned topics are the current areas of most interest to investors and shareholders.
See Also: SEC’s New Rule On Human Capital Disclosures »
Experienced Executive Compensation Disclosure Consultants
The compensation consulting experts at NFPCC are here to assist you with every aspect of your Proxy Statement, whether it be CEO pay ratio calculation, CD&A disclosures and everything in between. We can ensure your statement meets all SEC requirements and is an accurate representation of your company’s compensation practices.
