SEC Proposal Would Significantly Reduce Executive Pay Disclosure

SEC Proposal Would Sharply Scale Back Executive Compensation Disclosure for Most Public Companies

On May 19, 2026, the Securities and Exchange Commission released proposed amendments (Release No. 33-11419) that it has described as the most significant overhaul of public company reporting in two decades. While the proposal is broad—touching filer status, financial statement scaling, and registered offerings—its potential consequences for executive compensation disclosure are among the most far-reaching. If adopted as proposed, approximately 81% of public companies would qualify as non-accelerated filers (NAFs) and become eligible for substantially reduced executive compensation disclosure and would no longer be required to conduct shareholder advisory votes on executive compensation matters, including say-on-pay, say-on-frequency, and golden parachute votes.

For boards, compensation committees, and management teams, the proposal raises questions that extend beyond disclosure compliance. If the SEC ultimately reduces mandatory disclosure requirements as proposed, investors and proxy advisors may continue to expect the same level of transparency and shareholder engagement.

Critically, nothing changes today. The potential changes are only in the proposal stage, and the SEC is soliciting comments through July 20, 2026. Current Item 402 of Regulation S-K and existing advisory-vote requirements remain in full effect unless and until a final rule is adopted. Even if adopted, a final rule would likely not take effect until late 2026 or 2027—potentially in time for the 2027 proxy season. Until then, current Item 402 of Regulation S-K and the existing advisory-vote requirements continue to apply in full.

A New Two-Tier Filer Framework

The current framework divides registrants into five, sometimes overlapping, categories: large accelerated filers, accelerated filers, non-accelerated filers, smaller reporting companies (“SRC”), and emerging growth companies (“EGC”). The proposal would simplify this framework into a two-tier structure:

• Large accelerated filer (“LAF”): a seasoned issuer with (i) a public float of at least $2 billion (increased from the current threshold of $700 million) measured at the end of each of its two most recent second fiscal quarters, and (ii) at least 60 consecutive full calendar months of Exchange Act reporting.
• Non-accelerated filer (“NAF”): any reporting company that does not meet the LAF criteria.

The accelerated filer and SRC categories would be eliminated; EGC status would remain. A new "small NAF" subcategory—issuers with total assets of $35 million or less at the end of each of their two most recent second fiscal quarters—would qualify for extended periodic-report deadlines.

Two implications merit emphasis. First, while 81% of reporting companies would become NAFs, those issuers represent only a small fraction of aggregate market capitalization. Companies representing approximately 93.5% of total public float—including nearly all S&P 500 and S&P 400 constituents—would remain LAFs subject to full disclosure requirements. Second, because LAF status requires 60 consecutive months of Exchange Act reporting, newly public companies would be classified as NAFs for at least five years post-IPO, regardless of size. This effectively extends the period during which scaled-disclosure accommodations are available.

For a comprehensive discussion of the proposal’s new two-tier filer framework, see our prior alert, SEC Proposes Streamlined Filer Status Categories and Increased Access to Scaled Disclosure Accommodations (May 20, 2026).

What Changes for Executive Compensation

If adopted, NAFs would be eligible for the scaled compensation disclosures currently available to SRCs and EGCs. These scaled disclosures include:

• No Compensation Discussion & Analysis: the CD&A narrative would not be required.
• Fewer named executive officers: disclosure would cover three NEOs rather than five.
• Shorter Summary Compensation Table: only two fiscal years of disclosure would be required rather than three.
• Fewer supporting tables: the grants of plan-based awards, option exercises and stock vested, pension benefits, and nonqualified deferred compensation tables would not be required.
• No quantified termination or change-in-control payments: narrative disclosure would still be required under Item 402(q), but the quantified estimated-payment under Item 402(j)would not.
• No golden parachute disclosure: NAFs would be exempt from the Item 402(t) golden parachute compensation table required in connection with merger or change-in-control transactions.
• No pay-versus-performance disclosure: NAFs would be exempt from the Item 402(v) pay-versus-performance table.
• No CEO pay ratio: the Item 402(u) pay-ratio disclosure would not be required.
• No compensation risk assessment disclosure: NAFs would not be required to provide disclosure regarding compensation policies and practices as they relate to risk management.

Advisory Votes

NAFs would also be exempt from the shareholder advisory votes currently required under Rule 14a-21, including the say-on-pay vote, the say-on-frequency vote, and the advisory vote on golden parachute compensation in connection with merger transactions.

This represents a significant change in executive compensation governance practice. Companies considering this relief should consider whether voluntary shareholder engagement mechanisms remain appropriate notwithstanding the elimination of a legal requirement to do so.

Timing and Current Effect

• Comment period: comments are due by July 20, 2026. Among other questions, the SEC has invited input on whether public float is the appropriate measure of disclosure need and whether the $2 billion threshold and 60-month seasoning period are appropriate.
• No current effect: the proposal is not self-effectuating, and no disclosure changes may be made in reliance on this proposal until a final rule is adopted and becomes effective.
• Status determination mechanics: existing registrants would determine LAF or NAF status as of the end of the fiscal year preceding the effective date of any final rule. The timing of adoption will therefore dictate whether NAF relief is available for the 2027 proxy season.
• LAF disclosure unchanged: the proposal does not amend Item 402 for companies that remain LAFs, which would continue to be subject to the full executive compensation disclosure regime.
• Further rulemaking possible: the proposal grew out of the SEC’s June 2025 roundtable on executive compensation disclosure, and a separate, dedicated Item 402 rulemaking may still follow, including changes that could impact LAFs.

Practical Considerations

While no action is required now, companies, boards, compensation committees, and management teams may wish to:

• Assess likely filer status: model the two-year average public float test to determine whether the company would qualify as an LAF or NAF, and identify when scaled-disclosure relief would first become available.
• Evaluate voluntary disclosure practices: institutional investors and proxy advisory firms may continue to expect levels of compensation transparency and shareholder engagement that exceed minimum regulatory requirements. An NAF that has historically provided full compensation disclosure or conducted say-on-pay votes may determine that continuing to do so remains appropriate even absent a legal obligation.
• Consider governance and engagement implications: eliminating say-on-pay and reducing available comparative pay data may affect investor engagement strategies, peer benchmarking, and internal pay-equity analyses.
• Submit comments before the July 20 deadline: companies, investors, and compensation committees with views on the proposed thresholds or the scope of scaled disclosure relief may wish to submit a comment letter to the SEC before July 20, 2026.

Key Takeaway

Although the proposal would substantially reduce executive compensation disclosure obligations for most public companies, investor and proxy advisor expectations may not recalibrate as rapidly as the regulatory framework. Boards and compensation committees should therefore consider not only which disclosures and advisory votes would remain legally required under a final rule, but also whether voluntarily maintaining certain practices continues to serve the company’s governance objectives and shareholder-engagement strategy.