SEC Proposes Less Public Company Compensation Disclosure

The Securities and Exchange Commission has proposed amendments that would substantially expand the availability of scaled executive compensation disclosure and related proxy voting relief for many public companies. The proposal is part of a broader effort to reduce public-company compliance burdens and make the public markets more attractive.

If adopted, the proposal would simplify public-company filer status into two primary categories: large accelerated filers and non-accelerated filers. Companies that are not large accelerated filers generally would be permitted to use scaled executive compensation disclosure currently available to smaller reporting companies as well as certain compensation-related accommodations currently available to emerging growth companies. As a result, many more public companies could prepare shorter executive compensation disclosures and avoid several compensation-related advisory vote requirements.

The Core Compensation Relief

The proposal would make scaled executive compensation disclosure available to a much larger group of public companies. Non-accelerated filers would be permitted to disclose compensation for three rather than five named executive officers and provide two rather than three years of summary compensation table information.

Non-accelerated filers also could omit several compensation disclosures that currently apply to larger filers, including the Compensation Discussion & Analysis; pay ratio disclosure; pay-versus-performance disclosure; golden parachute disclosure; the grants of plan-based awards table, pension benefits table, option exercises and stock vested table; nonqualified deferred compensation table; and compensation risk disclosure. The proposal also would exempt non-accelerated filers from say-on-pay, say-on-pay frequency and golden parachute advisory vote requirements. For many companies, this could materially reduce the length, cost and complexity of annual proxy preparation and transaction-related compensation disclosure.

Who Gets the Relief

The compensation relief would turn on filer status. The proposal would raise the public float threshold for large accelerated filer status from $700 million to $2 billion, calculate public float using the average stock price over the last 10 trading days of the second fiscal quarter, and require a company to be subject to Exchange Act reporting for at least 60 consecutive calendar months before becoming a large accelerated filer. A company would move into or out of large accelerated filer status only after meeting, or failing to meet, the $2 billion public float threshold for two consecutive years.

As a result, many companies that are currently accelerated filers, and some companies that are currently large accelerated filers, could become non-accelerated filers and become eligible for the expanded executive compensation accommodations. The SEC estimates that approximately 19% of reporting companies would be large accelerated filers and approximately 81% would be non-accelerated filers. Accelerated filer and smaller reporting company status would be eliminated as separate regulatory categories.

For IPO candidates and newly public companies, the proposal would effectively create a five-year non-accelerated filer on-ramp before large accelerated filer status could apply, extending compensation disclosure relief beyond the current emerging growth company (EGC) framework in many cases.

Less Disclosure, Fewer Benchmarks

Companies should not assume that “permitted to omit” means “should omit.” Investor expectations, proxy advisor policies, institutional shareholder engagement, compensation committee governance practices, capital markets activity and peer-company disclosure practices may support retaining selected voluntary compensation disclosures.

The same relief that reduces proxy burdens may also reduce public compensation benchmarking data. If many peer companies provide scaled disclosure, compensation committees may have fewer public datapoints on compensation philosophy, performance metrics, equity awards, severance arrangements, change-in-control payments and compensation for executives beyond the top three NEOs. Companies may need to rely more heavily on compensation consultant databases and proprietary surveys.

M&A Compensation Diligence

For companies active in M&A, the proposal could reduce public information relevant to compensation and benefits diligence. Buyers may need more focused private diligence on equity awards, employment agreements, severance arrangements, retention plans, deferred compensation, Section 280G exposure and change-in-control payments. Sellers using scaled disclosure should be prepared for more detailed diligence requests and may consider maintaining selected voluntary compensation disclosures to reduce diligence friction and support valuation.

Administration Change Risk

The proposal has an administration-sensitive dimension. It is deregulatory in orientation and would reduce mandatory executive compensation and related proxy disclosure for a large number of companies. If finalized substantially as proposed, a future SEC under a different administration could revisit the rules through notice-and-comment rulemaking. The SEC states that if finalized as proposed, the action is expected to be an Executive Order 14192 deregulatory action.

A full repeal would not be automatic, but targeted recalibration is plausible. For compensation planning, the most important areas to monitor would be the scaled executive compensation accommodations and the proposed elimination of say-on-pay, say-on-pay frequency and golden parachute advisory vote requirements for non-accelerated filers.

Companies therefore should avoid building disclosure controls and compensation governance practices on the assumption that all relief, if finalized, will be permanent. A prudent approach is to identify which accommodations would produce meaningful burden reduction while preserving the ability to restore fuller compensation disclosure if investor expectations, transaction needs or future rulemaking developments warrant it.

What This Does Not Change

• EGC status would remain. Because EGC status is statutory, the SEC is not proposing to eliminate it, although separate reliance on EGC compensation accommodations may become less important.

• FPIs using FPI forms generally would be excluded. FPIs using Form 20-F or Form 40-F generally would not be able to rely on the proposed non-accelerated filer compensation accommodations.

• Transaction disclosure would still require judgment. Even where golden parachute disclosure or advisory votes are not required for non-accelerated filers, companies should continue to assess compensation-related disclosure in M&A and other transaction documents under applicable materiality and antifraud standards.

What Companies Should Do Now

Companies should assess how they would be classified under the proposed thresholds, whether to submit comments by July 20, 2026, and which executive compensation accommodations they would actually use if the rules are adopted. Companies that may become non-accelerated filers should consider whether to preserve selected voluntary compensation disclosures for investor relations, proxy advisor review, compensation committee governance, peer comparability, capital markets activity, M&A readiness and potential future rule changes.