I am heading to the SEC’s headquarters in Washington, DC today to join an all-star group of panelists for the SEC’s roundtable on executive compensation disclosure. If you are unable to attend this event in person, you can access a live webcast beginning at 1:00 pm Eastern Time today.

Heading to the SEC for this event later today reminds me of one of my all-time favorite stories from my time at the SEC. When the SEC considered amendments to the executive compensation disclosure rules back in 2006, I had the great honor of working on that rulemaking under the direction of then-Corp Fin Director Alan Beller and my wonderful boss and mentor, Paula Dubberly. This rulemaking initiative had generated some significant media interest at the time, because ever-rising executive pay had found its way into the zeitgeist of the mid-2000s, as the U.S. economy struggled following the Dot-Com bust while CEOs and other executives continued to receive what were perceived as outsized pay packages.

When I showed up in the SEC’s auditorium to assist with presenting the proposed rules for consideration by the Commission, I was surprised to see television cameras in the room, which is unusual for Commission open meetings. Alan and Paula also arrived, with Alan wearing an eye patch after suffering a serious eye injury just a few days before the open meeting. We sat down and went about the fairly mundane task of presenting our proposed rule amendments to the Commission, to be followed by the usual give-and-take with the Commissioners (including then-Commissioner Paul Atkins). Unbeknownst to me, the entire proceeding was being broadcast live on C-SPAN, and some alert C-SPAN watcher called my wife to tell her that I was on television. My wife then watched the program with my then five-year-old son John, who was very intrigued to see his dad appearing on television along with his SEC colleagues.

When I arrived home that night, my son met me at the door, visibly excited, and blurted out “Dad, I didn’t know you work with a pirate!” It took me a moment to figure out what he was talking about, but I quickly realized that Alan’s eye patch had given John the false impression that Alan’s profession was something other than Director of the Division of Corporation Finance. Given that my son was in his full “Pirates of the Caribbean” phase and was a huge admirer of Jack Sparrow, I took advantage of my fatherly prerogative to refrain from disabusing him of his notion, allowing me to bask in the glow of his admiration and avoiding the inevitable disappointment associated with explaining to him that I was actually on live television talking about executive compensation disclosure.

Many of the issues that were raised by Chairman Atkins in his statement regarding today’s roundtable certainly ring true for those of us who are involved in the preparation of executive compensation disclosures, as well as the investors who are reviewing those disclosures when making investment and voting decisions. I have always observed that approaching executive compensation disclosure requires a delicate balancing act – while the amounts paid for salaries, bonuses and equity awards are not quantitatively material for most companies, the qualitative materiality is important to consider when an investor is trying to understand how the company is governed, and how the executives are incentivized toward achieving business success. While that qualitative materiality element is important, the risk for information overload is high, given the fact that compensation programs often include numerous elements that can be very complex in some situations.

For my observations on areas that the Commission should consider if it decides to proceed with rulemaking, be sure to check out the upcoming May-June 2025 issue of The Corporate Executive. For the latest on comment letters that have been submitted to the SEC on this topic, check out this recent blog post from Liz on The Advisors’ Blog on CompensationStandards.com.

– Dave Lynn