For the first time in nearly two decades, the SEC is taking a hard look at how public companies tell shareholders about executive pay. Some might say this is old news, given that the SEC held its Executive Compensation Disclosure Roundtable almost a year ago, but we are still waiting on what is to come. Ten months, one proxy season, and roughly 70 substantive comment letters later, we now have the benefit of potentially seeing where the SEC may be headed.

What Is Item 402, and Why Does It Matter?

Item 402 of Regulation S-K is the SEC's master blueprint for executive compensation disclosure in public company proxy statements. It governs the Compensation Discussion and Analysis (CD&A) narrative and a host of tabular executive compensation disclosures, most notably the Summary Compensation Table (SCT). Originally adopted in 1992, significantly overhauled in 2006, and then layered with Dodd-Frank Act requirements beginning in 2010 (and rolled out over more than a decade), the rules are intended to give investors clear, comparable, decision-useful information about how much executives are paid and how that pay connects to performance.

In practice, however, the disclosure has grown far more complex than the original vision. Today's typical proxy runs dozens of pages on compensation alone, with overlapping tables, technical footnotes, and narratives that often read more like compliance exercises than shareholder communications.

What Did the SEC Roundtable on Executive Compensation Disclosure Set Out to Accomplish?

On June 26, 2025, SEC Chairman Paul Atkins convened a half-day public roundtable to ask a simple question: Are the current rules still working? His answer was implied in his opening remarks, where he called the current regime a "Frankenstein patchwork of rules," despite the statutory goal of providing "clear, concise, and understandable disclosure." Commissioners Peirce and Uyeda echoed the sentiment, with Commissioner Peirce calling the landscape "increasingly unwieldy and expensive and decreasingly useful."

Three panels of corporate executives, consultants, attorneys, and institutional investors aired perspectives throughout the day, and the SEC received more than 70 unique comment letters in the months that followed (with some as recent as April 2026). In January 2026, Chairman Atkins confirmed in a statement that he had directed the Division of Corporation Finance staff to engage in a comprehensive review of Regulation S-K, presumably with the goal of simplifying executive compensation disclosure while grounding any changes in the SEC’s three-part mission — (1) investor protection, (2) fair, orderly, and efficient markets, and (3) capital formation. While the degree of change is not certain, it seems probable that rulemaking is coming at some point, likely later in 2026.

Five Themes That Dominated the Discussion

During the roundtable and in the comment letters that followed, the following themes emerged. While these viewpoints were not universal, many roundtable participants and commenters (comprised of issuers, law firms, or policy groups) largely centered around these themes:

1. The disclosure framework has become too long, too complex, and too duplicative. This was the single most common observation. CD&A narratives have ballooned beyond what is useful, and the multiple equity tables present overlapping views of fundamentally the same data.
2. Pay-versus-performance disclosure is expensive, confusing, and underutilized. The PVP table, first required in 2023, drew some of the sharpest criticism. Its central metric - "compensation actually paid" - is a non-GAAP construct that many argued does not correspond to how companies, boards, or investors typically think about pay.
3. The CEO pay ratio adds cost without proportionate value. Multiple commenters argued that the CEO pay ratio is rarely referenced by investors or proxy advisors, is costly to produce, and fails to provide meaningful comparisons across companies with different workforce structures. Because it is a Dodd-Frank statutory mandate, the SEC likely cannot eliminate it outright, but there is room to simplify the methodology.
4. Executive security costs should not be treated as perquisites. This was one of the roundtable’s most unified moments. Panelists across all three panels argued that company-mandated security arrangements serve a legitimate business purpose and that current perquisite classification distorts corporate decision-making and may discourage necessary protections. This could be one of the fastest changes to materialize, potentially through staff guidance rather than formal rulemaking.
5. The framework should shift from prescriptive rules to principles-based disclosure. Many commenters argued the SEC should move toward a materiality-based approach that gives companies flexibility to focus on what actually matters for their programs. Not all roundtable participants and commenters agreed, with some institutional investors cautioning that prescriptive requirements are what make disclosures comparable.

What Comes Next?

No one has a crystal ball, and the formal rulemaking process is just getting started. It remains to be seen how deep the SEC’s proposed rulemaking will go. While many expect changes to perquisite disclosure, there are a host of other areas that could change. For example:

• Should issuers continue to be required to disclose compensation information for five Named Executive Officers (NEOs), or should disclosure be scaled back to include fewer executives (g., potentially only the CEO/CFO)?
• Should certain tables that report related information (particularly in the area of equity compensation) be simplified or combined?
• Should disclosures be simplified and restructured to report target compensation alongside actual/earned compensation?
• Should the PVP and CEO pay ratio disclosure rules be simplified?
• Should issuers be given more latitude within the CD&A to focus on the elements of their compensation programs that are most relevant to investors (a principles-based, materiality-focused framework), potentially resulting in shorter, clearer disclosures?

Leading law firms have publicly stated that they expect a proposed rule to emerge in late 2026 or early 2027. After a comment period and finalization, the most realistic target for compliance with the new rules would be the 2028 or 2029 proxy season. Some changes — particularly interpretive guidance on perquisites could arrive sooner.

What Companies Should Be Doing Now

Proposed rules are likely months away, and possibly much further out. Here are three takeaways issuers can work on now.

• Start with your own proxy. It is probably fresh on your mind, if you are a year-end filer. Read your most recent CD&A with fresh eyes and ask an honest question: does it tell a clear, compelling story about why executives were paid what they were paid? Or has it become a compliance document padded with boilerplate? The companies that will transition most smoothly to a principles-based framework are the ones that are already writing clear, concise narratives. This is a good time to identify sections that exist only because the rules require them and begin thinking about what a more streamlined disclosure would look like. Also consider what feedback, if any, you have received from major shareholders.
• Do not overhaul your 2027 proxy prematurely. It may be tempting to get ahead of the curve, but resist sinking too much time into planning wholesale changes in anticipation of rules that have not yet been proposed. This is not likely a good use of company resources until updated requirements are finalized. Focus on incremental improvements in clarity and readability, rather than structural overhauls.
• Prepare for a world where SEC requirements and investor expectations may diverge. Even if the SEC eliminates or simplifies certain disclosures, institutional investors and proxy advisory firms may continue to expect them. Companies will need to think carefully about what they disclose voluntarily versus what is required and build flexibility into their disclosure processes accordingly.