When peers stop talking about pay, your benchmarks start to break
The Securities and Exchange Commission’s executive compensation disclosure reform proposal, released in concept form on March 18, 2024 as part of the SEC’s broader disclosure modernization agenda, would move most issuers into a lighter reporting regime. In the March 18, 2024 concept release, internal SEC staff modeling suggests that roughly 81% of public companies would shift from large accelerated filer status to the non-accelerated filer category based on a higher public float threshold of approximately two billion dollars. That single structural change would reshape how compensation disclosure works for benchmarking, investor scrutiny and internal governance.
Today, compensation teams rely on dense Compensation Discussion and Analysis narratives, the pay-versus-performance table and the CEO pay ratio to calibrate executive pay. If four out of five peer companies become newly defined non-accelerated filers, or NAFs, and use the NAFs’ required minimums, those data-rich disclosures will shrink to a thin compensation table and two years of summary data. For many companies, the loss of three-year trends in executive compensation and detailed performance metrics will make peer analysis noisier, less comparable and ultimately less reliable.
Under the executive compensation disclosure reform proposal, non-accelerated filers would report only three named executive officers over two fiscal years instead of five over three. That means fewer data points on long-term incentives, fewer insights into how a compensation committee links pay and performance, and less context on one-time awards or retention grants. For rewards leaders who manage pay and performance across a complex company, the new disclosure rules will reduce external reference points just as state-level pay transparency rules expand internal expectations and employee awareness of compensation structures.
Benchmarking will not disappear, but it will change shape for every company that competes for executive talent. Public companies above the new public float threshold will still operate as large accelerated filers and keep the full suite of disclosure requirements, including detailed compensation disclosure under Item 402 of Regulation S-K. Those remaining large accelerated filers will become over-represented in market data, skewing perceived norms for executive pay and potentially inflating expectations for smaller issuers that now qualify as NAFs and report only the streamlined executive pay information.
Compensation committees at companies near the new threshold will need to understand how filer status affects both investor relations and talent markets. A company that hovers around the two billion dollars public float line could move in and out of large accelerated filer status, toggling between full and simplified disclosure requirements. For example, a company with a 1.9 billion dollars float at year-end that rises to 2.1 billion dollars the following year could move from NAF to LAF, then fall back again if its float drops to 1.8 billion dollars after a market correction. In that scenario, the peer group might see the number of usable compensation peers fall from 25 to 15 in a single cycle as former LAF peers adopt NAF-style disclosure, and proxy advisory firms could respond by increasing their reliance on broad market regression models rather than direct company-to-company comparisons.
For rewards leaders, the practical question is not whether the rules will change, but how quickly internal models can adapt. Many compensation teams have built pay-performance frameworks that assume three years of peer data and stable disclosure rules across cycles. As the executive compensation disclosure reform advances through the SEC’s rulemaking process and into a final release, those teams will need to revisit how they define peer groups, how they interpret compensation table outliers and how they explain shifting benchmarks to a skeptical shareholder advisory audience that will still demand coherent narratives on pay, performance and governance.
Should newly defined nafs keep talking anyway ? Voluntary disclosure as a signal
Once the executive compensation disclosure reform becomes effective in a final SEC rule, non-accelerated filers will face a strategic choice. They can follow the NAFs’ required minimums and provide only the streamlined compensation disclosure, or they can maintain elements of the prior regime voluntarily. That decision will say as much about a company’s governance posture and compensation philosophy as any formal policy or charter language.
For many public companies, the instinct will be to cut back on narrative disclosure and rely on the bare compensation table plus the required footnotes. Doing so reduces drafting time, lowers legal review costs and narrows the surface area for shareholder advisory criticism about CEO pay levels or incentive design. Yet it also removes a key channel to explain how executive pay supports long-term performance, how the compensation committee exercises discretion and how the company responds to prior say-on-pay feedback and engagement with major institutional investors.
Rewards leaders should treat voluntary disclosure as a strategic asset, not a compliance burden. Maintaining a concise but substantive discussion of pay-performance alignment can help stabilize investor expectations when peers go silent. It also gives the compensation committee room to explain why certain changes in executive compensation, such as front-loaded equity, special one-time retention awards or adjustments to performance metrics, are consistent with the company’s long-term strategy rather than simple windfalls for senior executives.
Proxy advisory firms such as Glass Lewis and Institutional Shareholder Services have built their models on standardized disclosure requirements, including the pay-versus-performance table and detailed incentive plan descriptions. As more companies adopt the NAFs’ framework, those firms will have to lean harder on whatever voluntary disclosure remains, as well as on external signals such as social media sentiment, analyst commentary and prior voting outcomes. That shift will make clear, plain-English explanations of executive pay decisions even more valuable for companies that want to avoid blunt, formula-driven voting recommendations or negative say-on-pay outcomes.
Compensation committees should also consider how reduced disclosure interacts with other transparency trends. State-level pay transparency rules, from California to New York, are pushing detailed salary ranges and bonus targets into public view for broad employee populations. Employees who can now decode their own pay through tools that explain concepts such as year-to-date pay on a paycheck will not understand why executive pay suddenly becomes more opaque in the proxy, especially when leadership is emphasizing fairness, equity and accountability in internal communications.
For comp teams, the better path is usually selective simplification rather than wholesale silence. Trimming boilerplate while preserving a clear narrative around executive compensation, performance metrics and governance practices can satisfy both the spirit of the executive compensation disclosure reform and the expectations of sophisticated investors. That approach also leaves room to integrate emerging analytics and AI in rewards, including careful use of algorithms to model pay outcomes and identify risk hot spots, without turning the proxy into a technical manual or creating new legal exposure.
Life around the two billion dollars line : strategy, risk and the next roundtable
Companies that sit just below or just above the proposed public float threshold will feel the sharpest tension. A modest change in share price or share count can move a company from non-accelerated filer status into the large accelerated filer, or LAF, category and back again. That means disclosure requirements, including the depth of compensation disclosure and the number of named executive officers, could swing from year to year and create confusing shifts in the level of detail available to investors and employees.
For those issuers, the executive compensation disclosure reform is not only a compliance project but a capital markets strategy question. Finance, legal and rewards leaders should run scenarios that link public float, filer status and likely investor expectations over a three- to five-year horizon. In some cases, maintaining a voluntary level of disclosure that is stable across both NAFs and LAF classifications will be less risky than toggling between sparse and dense narratives as the company’s market value moves, particularly for companies that already face close scrutiny on pay-performance alignment.
Boards should expect more frequent conversations with shareholder advisory teams and major investors about how they interpret the new disclosure rules. Many investors will ask whether a company that takes full advantage of the NAFs’ required minimums is signaling a weaker governance posture. Others may press for continued detail on executive pay structure, especially where pay-performance alignment has been controversial in prior years or where say-on-pay support has been fragile and required targeted outreach to stabilize voting outcomes.
Regulators and practitioners are already organizing roundtable discussions to test how the proposed rules will play out in practice. Those roundtables will likely feature panelists from public companies of different sizes, compensation committee chairs, and legal advisers who specialize in Item 402 of Regulation S-K disclosure. A recurring theme will be how to balance the SEC’s deregulatory move with the broader policy trend toward more transparency in pay, housing and other areas of economic life, including local initiatives that expand access to information about public benefits and affordability for lower-income households.
For rewards leaders, the operational work starts now, even before any changes are finalized. Comp teams should inventory every place where they rely on peer disclosure, from market pricing of executive roles to the design of long-term incentive plans and the calibration of internal pay equity analyses. They should also map how a shift in disclosure rules could affect relationships with Glass Lewis, major index funds and other stakeholders who scrutinize executive compensation, and identify which internal owners will be accountable for updating models, drafting new narratives and coordinating investor outreach.
To turn that planning into action, compensation leaders can use a simple checklist: confirm current and projected public float with finance; model at least two years of NAFs and LAF scenarios with legal and investor relations; refresh peer groups and benchmarking tools to account for thinner disclosure; draft a voluntary disclosure framework that can remain stable across filer statuses; brief the compensation committee and board on likely investor questions; and set an internal timeline so that revised executive pay narratives are ready before the next proxy cycle begins. The next proxy cycle will test which companies treat executive compensation disclosure reform as a narrow compliance exercise and which use it to reset their narrative on pay, performance and governance. Those that plan across multiple years, model both NAFs and LAF scenarios and engage openly with investors will be better positioned than those that simply follow the minimum required text. In a market where scrutiny never really disappears, less disclosure is not a shield, just a different kind of spotlight and not another merit matrix, but an actual retention lever.