SEC Spring 2024 Regulatory Agenda Postpones Action on Executive Compensation Rules

The SEC, like other federal agencies, is required to publish a semiannual report on the rules it is considering, covering both the expected release date for rules that have not yet been proposed and the finalization date for rules that have been proposed.  While referred to as the spring and fall regulatory agendas, publication often occurs in the following quarter.   The SEC Spring 2024 Regulatory Agenda was released in July.

The SEC has four rules under consideration relevant to executive compensation matters. In each case the date of SEC action has been postponed from the dates previously announced in the Fall 2023 Regulatory Agenda.  One should not attribute too much significance to a particular postponement, since it does not necessarily mean the SEC has modified its views regarding the issue to be addressed by the rule in question. 

The four SEC rules related to executive compensation are these:

1. Increased disclosures regarding human capital management-- timing for SEC action moved from April 2024 to October 2024

• The SEC has been considering publishing a proposed rule that would substantially increase the complexity of human capital disclosures in the annual report, as described in the FW Cook Alert of October 5, 2023.

2. Incentive compensation rules for financial institutions under section 956 of the Dodd-Frank Act—timing for SEC action on a new proposal moved from April 2024 to October 2024

• Section 956 of the Dodd-Frank Act authorizes regulations related to incentive compensation of financial institutions pursuant to joint action by the six federal agencies that regulate financial institutions—the FDIC, the OCC, the FHFA, the NCUA, the SEC, and the Federal Reserve Board.  Rules have been proposed twice by all six agencies, most recently in 2016.  In May 2024 the rules were again reproposed by four of the agencies, excluding the Federal Reserve and the SEC.  The text of the reproposed rules is the same as in 2016, though supplementary information in the May reproposal suggested an expanded version of the final rule is being considered by the four agencies.

3. Increased disclosures about board diversity --timing for SEC action moved from October 2024 to April 2025

• The SEC has not proposed a rule in this area but has been considering doing so.

4. Finalizing the 2022 proposed SEC rule regarding grounds for excluding shareholder proposals-- timing for SEC action moved from April 2024 to April 2025)  

• This July 2022 proposal narrows certain grounds for excluding shareholder proposals.  Its controversial nature is indicated by the fact that only three of the five SEC commissioners voted to propose the rule.              

David Gordon
Managing Director

Dave Gordon’s practice as an executive compensation consultant covers a variety of industries, including extensive experience with financial institutions and utilities. Based on his years of experience as an executive compensation lawyer, he acts as the senior resource on numerous technical issues for the Firm. He frequently acts as an expert witness.