U.S. Chamber Comments on SEC Request for Information on Executive Compensation

Dear Ms. Countryman:

The U.S. Chamber of Commerce (“Chamber”) submits these comments for the Securities and Exchange Commission’s (“SEC”) roundtable regarding public company executive compensation disclosure. The Chamber commends the SEC for holding this roundtable on a timely issue and frequent topic of discussion within the SEC’s corporate disclosure framework. We appreciate the Chairman’s initiative to review disclosures with respect to the public company model to evaluate whether certain disclosures serve as impediments to companies accessing and remaining in the public markets.

As the SEC discusses this subject and considers potential reforms in this area, the Chamber provides the following recommendations, which are discussed in further detail below:

1.     The SEC should fundamentally reassess current requirements under Item 402 of Regulation S-K (including Compensation Discussion & Analysis, or “CD&A”) and adopt any changes or simplification necessary to ensure investors receive clear and decision-useful information regarding executive compensation;

2.    The SEC should review current perquisite (“perk”) disclosure requirements and exempt from perk disclosure certain expenses, including expenses for personal security;

3.    The role and influence of proxy advisory firms should be assessed as part of any discussion about corporate decisions and disclosures regarding executive pay;

4.    While the Chamber continues to support Congressional repeal of Section 953(b) of the 2010 Dodd-Frank Act (the “pay ratio” rule), the SEC should use its existing authority to address compliance challenges that businesses continue to face under the final pay ratio rule adopted by the SEC in 2015;

5.    The SEC should make changes to its 2022 rule implementing Section 953(a) of the Dodd-Frank Act (the “pay versus performance” rule) to adopt a more principles-based approach to the requirement;

6.    The SEC, along with the federal banking regulators, National Credit Union Administration, and the Federal Housing Finance Authority, should abandon an overly prescriptive 2016 proposal to implement Section 956 of the Dodd-Frank Act (“incentive compensation” rule) and reassess Section 956 implementation;

7.     The SEC’s rule implementing Section 954 of the Dodd-Frank Act (“clawback” rule) should be revisited so that the rule reflects clawback policies that companies have enacted since 2010; and,

8.    The SEC should seek further tailoring of executive compensation disclosure requirements for small issuers, including smaller reporting companies (SRCs) and emerging growth companies (EGCs).

Background

In his statement accompanying the announcement of the roundtable, Chairman Atkins noted that executive compensation disclosures “have become increasingly complex and lengthy” and questioned whether the “increased complexity and length have provided investors with additional information that is material to their investment and voting decisions.”[1]

The complexity of executive compensation disclosures today is largely the result of multiple SEC rulemakings on the topic stretching back decades, SEC staff interpretations, and Congressional mandates for specific disclosures regarding executive compensation. Executive compensation disclosure mandates have been layered on top of each other over the years, and with each new rulemaking the SEC has done little aggregate analysis to determine whether the full scope of executive compensation disclosures provide investors with material information and a clear picture of executive pay at a particular company.

In 2006, the SEC adopted rules on executive compensation, including new requirements for compensation discussion & analysis (CD&A) under Item 402 of Regulation S-K.[2] These rules were “intended to provide investors with a clearer and more complete picture of the compensation earned by a company’s principal executive officer, principal financial officer, and highest paid executive officers and members of its boards of directors.”[3] While principles-based in nature, continuously evolving staff views and interpretations of CD&A has contributed to a marked increase in the volume of information provided by companies regarding executive compensation.

Dodd-Frank Executive Compensation Rules

The complexity of existing SEC requirements was compounded by the 2010 Dodd-Frank Act, which contained a panoply of new executive compensation rules. As the Chamber has pointed out in previous comment letters to the SEC, the requirements under many of these mandates, when disclosed alongside CD&A and extensive tabular disclosure in proxy materials, can confuse - rather than clarify - executive compensation policies at public companies.

Click here to view the full letter.

[1] Statement on the Upcoming Executive Compensation Roundtable. Chairman Paul Akins – May 16, 2025. (Atkins Statement)

[2] Executive Compensation and Related Person Disclosure – Sep. 8th, 2006. (SEC 2006 Rule)

[3] SEC 2006 Rule at 1