The U.S. Securities and Exchange Commission has advanced a plan to reform executive compensation disclosure requirements, submitting a proposal to the White House's Office of Management and Budget for review on Wednesday.
The proposal, titled Executive Compensation Disclosure Reform, targets Item 402 of Regulation S-K, which governs how public companies disclose executive pay. The SEC classified the initiative as economically significant and deregulatory, aligning it with provisions under the Dodd-Frank Act. A regulatory flexibility analysis will be required to assess the impact on small businesses.
The proposal was posted on the OMB's website on Thursday, following its submission. The SEC's regulatory agenda indicates a notice of proposed rulemaking is scheduled for October 2026, marking a potential overhaul of rules first established in 1992.
Current disclosure mandates require companies to annually report compensation details for the CEO, CFO, and the three highest-paid executives. Firms must also explain how pay decisions are made and the extent to which compensation is tied to performance.
SEC Chair Paul Atkins has emphasized reforming the agency's disclosure framework, with a focus on minimizing regulatory burden while prioritizing material information. An SEC spokesman stated in an email to Bloomberg that Atkins' goal is to provide "the minimum effective dose of regulation with materiality as its North Star."
