SEC Proposal Would Cut Named Executives to Two, Raise Perk Threshold

The SEC proposed amendments Friday that would shrink most companies' named executive officer group from five or more to two — the principal executive officer and the principal financial officer — in the first comprehensive overhaul of executive compensation disclosure rules since 2006.

The proposal revises Item 402 of Regulation S-K and, SEC chair Paul Atkins said, forms part of a broader push to rebuild the agency's public company disclosure regime around materiality. "These amendments reflect a comprehensive reform of [Regulation S-K] Item 402 that, together with other previously proposed actions, are central tenets of my agenda and focus on transforming the SEC's public company disclosure regime to one rooted in materiality," Atkins said in a news release.

What would change for compensation teams?

The SEC built the proposal on input from more than 80 comment letters from investors, companies and advisers, collected after its July 2025 roundtable on executive compensation. Atkins said the proposal "aims to elicit more informative disclosure rooted in materiality."

For HR and compensation leaders at public companies, the changes touch several long-standing reporting obligations:

• Named executive officers. The NEO group would cover only the principal executive officer and principal financial officer, cutting the typical list from five or more to two.
• Compensation tables. The four current tables would become three: earned compensation, granted compensation, and status of equity awards.
• Perquisites. The minimum aggregate reporting threshold would jump from $10,000 to $150,000, with a new de minimis tracking exclusion on top.
• Pay-versus-performance and pay ratio. The proposal would simplify pay-versus-performance disclosures and revise employee pay-ratio reporting requirements.

The SEC said the amendments would improve investors' ability to track equity awards through their full life cycle. They'd also give registrants more flexibility to present disclosures in a way that matches how compensation programs are actually built today.

The agency framed the changes as a burden trade: less compliance work for registrants where investors see no matching benefit, paired with sharper, materiality-based reporting.

When would it take effect?

Not yet. The proposal isn't final, and the clock for input runs 60 days from its publication in the Federal Register. Companies with year-end proxy cycles will want to watch the comment period closely, since the NEO reduction alone would eliminate three or more executive profiles per filing for most registrants.

Compensation committees and total-rewards teams should start mapping which disclosure tables, perk-tracking processes and pay-ratio calculations would shrink or disappear if the proposal survives comment intact.

Related SEC actions worth tracking

Three other developments landed alongside the proposal:

• The SEC approved the PCAOB's amendments to QC 1000, A Firm's System of Quality Control, effective Dec. 15.
• The SEC adopted amendments defining which registered investment companies, investment advisers and business development companies qualify as small entities under the Regulatory Flexibility Act.
• The AICPA Conference on Current SEC and PCAOB Developments runs Dec. 7–9 in Washington, DC, and online, with registration still open.

Atkins tied the Item 402 package to his wider agenda, so expect further materiality-driven disclosure proposals to follow — and with them, more chances for HR teams to weigh in on how compensation reporting gets rebuilt.

By Priya Raman