On November 13, 2026, the Securities and Exchange Commission (“SEC”) proposed a broad rewrite of the executive and director compensation disclosure requirements in Item 402 of Regulation S-K (Release Nos. 33-11455; 34-106873). The long-awaited proposal is intended to move Item 402 away from its current prescriptive framework toward a more principles-based approach focused on material information. The SEC expects the changes to ease compliance burdens while preserving the information investors need.

Item 402 was comprehensively revised in 1992 and substantially expanded in 2006. It has continued to grow since then, most notably through the amendments implementing certain provisions of the Dodd-Frank Act. As a result, many market participants have raised the concern that compensation disclosure has become longer and more complex without a corresponding increase in useful information for investors, and the SEC’s proposals are intended to address this concern. The proposal follows the SEC’s June 2025 Roundtable on Executive Compensation Disclosure Requirements (see our summary here) and draws on over 80 comment letters submitted in response. Chairman Paul S. Atkins said the proposal would refocus Item 402 on what a reasonable investor needs, rather than “the specialized tastes of a specific investor.” Commissioner Mark T. Uyeda added that the framework “has, for decades, grown by accretion rather than design.”

Key proposed changes include:

  • Named executive officers. Named executive officers (“NEOs”) would include only individuals who served as the principal executive officer (“PEO”) or principal financial officer (“PFO”), or acted in a similar capacity, during the last completed fiscal year. Today, depending on reporting status, companies typically report on five or more executives (SRCs and EGCs typically report on three).
  • New compensation tables. Three new tables, the Earned Compensation Table, the Granted Compensation Table and the Status of Equity Awards Table, would replace the four primary tables currently required. The Pension Benefits Table and the Nonqualified Deferred Compensation Table would be eliminated.
  • Perquisites. The aggregate reporting threshold for perks would rise from $10,000 to $150,000. Under a new de minimis tracking exclusion, companies could choose to leave out individual perquisites that qualify as de minimis fringe benefits under Section 132(a)(4) of the Internal Revenue Code when testing that threshold. The proposal would also revise the Commission’s existing interpretive guidance to provide companies with more flexibility to determine whether a benefit is integrally and directly related to an executive’s duties, provided the determination is reasonable and made in good faith.
  • Compensation Discussion and Analysis (“CD&A”). The CD&A requirements would be revised to be more principles-based, requiring companies to address only three topics: the compensation program’s objectives in relation to corporate strategy; its material elements and how compensation amounts are determined; and, where applicable, whether the company considered the results of its most recent say-on-pay vote and, if so, how that consideration affected its compensation policies and decisions. The 15 illustrative disclosure topics currently included in Item 402 would be eliminated.
  • Pay-versus-performance. The proposal would significantly simplify the pay-versus-performance disclosure requirement by replacing the current requirement to provide “Compensation Actually Paid” with “Total Compensation Earned” from the proposed Earned Compensation Table.  In addition, the disclosure would focus only on the PEO and PFO, with the company’s cumulative TSR as the only required performance measure. Net income, peer-group TSR and the Tabular List would be eliminated, while the Company-Selected Measure would become optional. The disclosure period would be three years for all registrants required to provide the disclosure, rather than five years, and EGCs would remain exempt.
  • Pay ratio. The median employee would be drawn from full-time employees of the company and its consolidated subsidiaries who work in the United States or its territories, excluding the PEO and temporary and seasonal workers. A new median employee would need to be identified at least once every five years, rather than every three. Annual total compensation for the PEO and median employee would be calculated using the methodology of the proposed Granted Compensation Table.
  • Clawbacks. Companies would no longer have to explain why recovery of erroneously awarded compensation was not required, and the related checkboxes on the annual report cover page would be removed. Disclosure of actions taken to recover erroneously awarded compensation would remain, as would the underlying recovery-policy requirements under applicable listing standards.
  • Termination table and golden parachute disclosure. Disclosure of potential payments upon termination or a change in control would also be simplified. Instead of quantifying payments under hypothetical scenarios, companies would describe the material terms of the arrangements. Golden parachute disclosure would be streamlined, including through a simpler table.
  • Director compensation. The current Director Compensation Table would be eliminated. In its place, companies would describe their director compensation programs and disclose material compensation information. That would include quantified cash fees, the value of equity awards realized upon vesting or exercise, and outstanding director equity awards.

Two existing requirements would be eliminated outright under the proposal: the compensation risk disclosure required under Item 402(s) and the Item 402(x) disclosure with respect to equity awards granted close in time to the release of material nonpublic information.

The SEC acknowledges that the proposal would likely mean less disclosure overall, but noting that companies would still have to disclose material information relevant to an assessment of NEO and director compensation, and they would be free to add other relevant information. If adopted, the changes would significantly alter how public companies present executive and director pay in their proxy statements.

Comments on the proposal are due 60 days after its publication in the Federal Register. If adopted, the amendments would become effective on the next January 1 following publication of the adopting release in the Federal Register. Registrants would be required to comply beginning with their first full fiscal year ending on or after the effective date. The amendments would also apply to registration statements and prospectuses initially filed on or after the effective date that are required to include financial statements for a fiscal year ending on or after that date.

For a more detailed discussion of the proposed amendments and their implications for public companies, see our forthcoming Legal Update.