Pay vs. Performance Disclosure

Accurately calculate pay vs. performance and determine any supplementary analytics needed to clarify your proxy story.

The SEC’s proposed guidance on pay vs. performance disclosures has two main components. One is the total shareholder return (TSR) calculations for yourself and your peers. The other is compensation “actually paid.”

To begin with, the TSR calculations are almost surely different from other TSR calculations you perform, and compensation actually paid requires calculating the fair value of equity awards on the vesting date. For options, this can mean using different valuation assumptions (or even a different model entirely) than those used for the grant date valuation.