Pay Versus Performance: SEC modernization brings Inline XBRL tagging to the proxy statement

4 minute read
Pay Versus Performance: SEC modernization brings Inline XBRL tagging to the proxy statement


The SEC adopted a significant new rule, Pay Versus Performance, on Thursday, August 25, 2022 requiring companies to disclose information reflecting the relationship between executive compensation and financial performance. The rule continues the SEC’s focus on modernization by mandating Inline XBRL (iXBRL) tagging of executive compensation data in the proxy statement. The rule went into effect on December 16, 2022.

The path leading to iXBRL tagging requirements in the proxy statement

Public companies tell their story to investors and the market through their annual report and proxy statement. After the financial crisis in 2008, the SEC expanded the executive compensation data required to be reported in proxy statements. In 2010, the Dodd-Frank Act directed the SEC to adopt rules requiring registrants to provide more data regarding the company’s financial performance compared to executive compensation. The SEC initially proposed the Pay vs Performance rule in 2015 and reopened it for public comment in January 2022.

Modernizing with Pay Versus Performance

The rule implements new Item 402(v) of Regulation S-K. The SEC is revising and expanding the existing executive compensation table disclosure. Registrants will be required to provide a table disclosing specific executive compensation and financial performance measures for the registrant’s five most recently completed fiscal years, depending on their status. The final rules require registrants to separately iXBRL tag each value disclosed in the table, block-text tag the footnote and relationship disclosure and tag specific data points within the footnotes to the table.

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The table must include the Summary Compensation table measure of total compensation and a measure reflecting compensation actually paid. Compensation data must be reported for principal executive officer(s) (“PEO”) and, as an average, the other named executive officers (“NEOs”).

A look at the details

The financial performance measures in the table include:

  • Total shareholder return (“TSR”) for the registrant
  • TSR for the registrant’s peer group
  • Registrant’s net income; and
  • A financial performance measure chosen by the registrant and specific to the registrant (the “Company-Selected Measure”)

Form Types: Applicable proxy and information statements

Format: Inline XBRL

Timing: Registrants are required to comply with proxy statements for fiscal years ending on or after December 16, 2022.

  • Large accelerated, accelerated and standard filers will be required to provide three years of data in the first proxy or information statement which contains the disclosure,
  • adding another year of data in each of the two subsequent annual proxy filings that require the disclosure (for a total of five years).

Smaller Reporting Companies (SRC) will:

  • Initially be required to provide two years of data,
  • adding an additional year of disclosure in the subsequent annual proxy or information statement that requires the disclosure.
  • Additionally, SRCs will only be required to report the data in Inline XBRL beginning in the third filing which contains pay versus performance disclosure, instead of the first.

Note: The rules do not apply to Foreign Private Issuers, Investment Management filers (such as Business Development Companies, unless self-regulated) or Emerging Growth Companies.

What does XBRL tagging mean?

XBRL, short for eXtensible Business Reporting Language, is XML-based open technology used to produce financial statements in a structured data format that can be read by people and machines. With Inline or iXBRL, tagging is used in a way that’s similar to using barcodes to scan financial numbers. By having content that can be read by machines, it’s easier to consume that information. 


To meet the demands of shareholders, your annual meeting and proxy process needs to evolve to increase shareholder participation and effectively communicate corporate objectives and values. Whether it is the CD&A or ESG related topics such as Equity, Diversity and Inclusion, Human Capital, COVID-19 impacts or Climate Change, our design and advisory team presents best practices along with peer group comparisons to improve proxy presentation, messaging, and effectiveness.

Toppan Merrill, a leader in financial printing and communication solutions, is part of the Toppan Printing Co., Ltd., the world’s leading printing group, headquartered in Tokyo with approximately US$14 billion in annual sales. Toppan Merrill has been a pioneer and trusted partner to the financial, legal and corporate communities for five decades, providing secure, innovative solutions to complex content and communications requirements. Through proactive partnerships, unparalleled expertise, continuous innovation and unmatched service, Toppan Merrill delivers a hassle-free experience for mission-critical content for capital markets transactions, financial reporting and regulatory disclosure filings, and marketing and communications solutions for regulated and non-regulated industries. With global expertise in major capital markets, Toppan Merrill delivers unmatched service around the world.

Discover how Toppan Merrill can help meet your SEC-mandated iXBRL tagging and proxy statement requirements. 

Toppan Merrill

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