The Securities and Exchange Commission proposed Friday to require most public companies to disclose detailed pay for two executives instead of the five or more typically listed today. For shareholders reading an annual proxy statement, the change would leave fewer executive pay packages to compare. The SEC would also change how companies report stock awards, executive perks and the gap between a chief executive’s pay and a worker’s.
The SEC released the proposal on Nov. 13. Existing reporting rules continue to apply. The Commission says the changes would make disclosures easier to read and focus them on information investors are likely to use. The investor advocacy group Better Markets argues that reporting pay for fewer executives would make it harder to see how boards reward the people running a company.
Which executives and perks would still be disclosed
Under the general rules today, companies disclose detailed compensation for their principal executive and financial officers, typically the CEO and CFO, and their three other highest-paid executive officers, subject to the rule’s definitions and exceptions. The SEC fact sheet says the proposal would limit the required named group to the principal executive and financial officers. That could take a highly paid operating or technology chief out of the mandatory comparison if that person holds neither position.
The SEC would raise the aggregate threshold for reporting perks for each named executive from $10,000 to $150,000. An executive with $60,000 in benefits classified as perks could clear the current threshold and fall below the proposed one. That example illustrates the threshold alone. The proposal also revises the guidance companies would use to decide which benefits count, including removing examples related to personal security.
How the stock award tables would work
The proposed Granted Compensation Table would show the estimated value of stock and option awards when a company grants them. A separate table would track outstanding equity awards. The Earned Compensation Table would count stock awards when they vest and options when the executive exercises them. These events can fall in different years. A stock award granted this year and vested next year would show up as a grant first, then as earned pay in the later period. The value can change between those dates. A separate filing can also describe an award when it is announced, as Goodyear’s recent Form 8-K did for its interim CEO.
The proposal would use the earned-pay figure in the pay-versus-performance table in place of the current calculation called Compensation Actually Paid. It would require three years of that comparison instead of five and limit the required performance measure to the company’s cumulative total shareholder return. The proposed tables would give investors two points in time for tracking an award, alongside a shorter required history for comparing pay with shareholder returns.
Why the CEO pay ratio could change
The ratio compares the CEO’s annual total compensation with that of a worker near the middle of the company’s pay distribution. The current rules generally draw from employees in and outside the United States, with some exclusions allowed. The proposal would use U.S. full-time employees and exclude seasonal and temporary workers. It would also allow companies to use the same median employee for up to five years, compared with three under the current framework.
Microsoft’s 2026 proxy statement shows what readers see now. It reports $90.6 million in CEO compensation and $215,057 for the median worker, a ratio of 421 to 1. Microsoft says it used the same median worker it selected for its prior proxy. The company has not reported what the ratio would be under the proposed rules. A company’s new ratio could change because the worker group changed, even if its CEO’s pay stayed the same.
How to follow the proposal
The SEC says comments will be due 60 days after the proposal appears in the Federal Register. The Nov. 13 announcement itself did not start that clock. The SEC’s rulemaking page for file S7-2026-39 links to the comment form and received comments. Shareholders voting on an existing pay proposal, such as the advisory vote on Microsoft’s December ballot, can use the disclosures in the company’s current proxy.
