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SEC to Introduce New Rules on Executive Compensation and Reporting

The SEC is expected to propose new rules today regarding executive compensation, and how it is tied to financial performance.  This was originally mandated in 2010 as part of the Dodd-Frank financial law, and is intended to allow investors to not only understand the amount and structure of executive pay, but to challenge it.

According to the Wall Street Journal, “if finalized, companies would have to include a new table in their annual proxy filings disclosing top executives’ actual pay. That is a new figure based on total compensation companies already calculate for their five highest-paid executives, though it would exclude certain components of compensation that officers don’t actually take home, such as share grants that have yet to vest.

Many observers, including Michael Kesner, who heads the executive compensation practice at Deloitte Consulting LLP, consider the new rules to be a “game changer.”  This will force companies to report how executives are paid as compared to total shareholder return (the annual change in stock price plus reinvested dividends).

How will these guidelines affect your San Diego business?  What impact will these proposed changes have upon the compensation of key executivies in your company?  Contact Allen Barron at 866-631-3470 to discuss these critical business issues and the impact they will have upon corporate accounting and financial reporting.