In a series of 15 Compliance and Disclosure Interpretations (“C&DI”s), the U.S. Securities and Exchange Commission on Feb. 10, 2023 attempted to clarify certain questions that have arisen as reporting companies prepare their “pay vs performance” (“PvP”) disclosures for their 2023 proxy statements. The C&DIs cover a variety of topics, including the treatment of first-time NEOs and presentation of multiple PEOs, but we’ve highlighted a few below:

• Confirmation that registrants need to specify via footnote disclosure each of the adjustments made for pension plans and equity awards pursuant to Item 402(v)(2)(iii)(B) and (C), respectively, rather than presenting the aggregate adjustment. Further, this footnote disclosure is required for each of the years shown in the initial PvP table but going forward will only be required for the most recent year presented, unless information for prior years would be material to an investor’s understanding of the information presented in the table or the relationship disclosure required by Item 402(v)(5).

• Clarification that a registrant may use the peer group disclosed in its Compensation Discussion and Analysis (“CD&A”) as the “peer group” for calculation of total shareholder return under Item 402(v)(2)(iv), even if the registrant does not use such peer group for “benchmarking” as defined in C&DI 118.05.

• Explanation that, even though a company’s stock price has an impact on the amounts reported in the PvP table, it would be inappropriate to use stock price as the “Company-Selected Measure” if it is not used to link compensation actually paid to NEOs to company performance.

• Confirmation that “net income” must be GAAP net income (or loss) — i.e., it would be inappropriate for a company with consolidated subsidiaries to use net income attributable to the controlling interest for this purpose.

The newly released guidance can be found in Regulation S-K C&DIs 128D.01 through 128D.13 and interpretations 228D.01 and 228D.02.