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Quick update regarding Pay vs. Performance

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Hello SEC filers!

As discussed here, the SEC’s mandate for Pay vs. Performance iXBRL tagging requirements become effective for all Proxy or Information Statements which require Item 402 Executive Compensation (commonly filed as SEC Forms DEF 14A or DEF 14C) and a fiscal year end date on or after December 16, 2022.

Recently too, XBRL.US held a webinar on October 26th to discuss these requirements further and Workiva is closely monitoring the new requirements to ensure you will be supported for your first iXBRL filing under this mandate. Below are a highlight of some important items to be aware of from the recent webinar:

  • Pay vs Performance disclosure requirements within proxy statements and information statements must be tagged using the ECD Taxonomy. The ECD taxonomy is currently in a draft state and open for commenting until November 30, 2022. This taxonomy will not be available for use to tag or submit any data to the SEC until it is formally approved and accepted by the SEC after the November 30, 2022 date. The Workiva platform will be updated to support this taxonomy after it is approved by the SEC.
  • The ECD taxonomy will also include US-GAAP concepts. On the XBRL.US webinar it was indicated that a filers Annual Report (10-K) and Proxy Statements or information statement must be filed with the same version of the US-GAAP taxonomy. Workiva has since received clarification that the synchronization of version year applies only to the same submission. Thus, a Form 10-K will not need to use the same version as a subsequent Proxy Statement submission. Nonetheless the SEC highly recommends filers to consider using the 2022 US-GAAP version for filing your next Form 10-K.
  • iXBRL tagging requirements are to detail and text block tag various data points under new Item 402(v) noted in this regulation. This will also include mandatory XBRL data under SEC EFM rule 6.5.20, which relates to hidden or other data disclosed on the cover page of your form.
  • There is currently no requirement or guidance from the SEC on where to place the new Pay vs. Performance table that is required under this mandate in your Proxy or Information Statement.
  • All Smaller Reporting Company (SRC) filers follow the phase-in schedule for SRCs, no matter their acceleration status.
  • A requirement for having Exhibit 104 in the exhibit index is still awaiting further information from the SEC.

More communication will come once the taxonomy is SEC approved and available within the Workiva Platform. Additionally, should the SEC provide any further clarification on the items denoted above we will continue to provide updates.

Since we understand that iXBRL tagging may be new for you and your teams, Workiva Professional Services will be available for any of your iXBRL needs. Should you want to discuss support options to assist in meeting the requirements of this upcoming Pay vs. Performance mandate, please do not hesitate to reach out to your Account or Renewals Sales owner, or to your Customer Success or Professional Services managers to assist further!

Thanks as always and let us know what questions you have.

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  • Kimberly Lanier

    Mike, I have reviewed several DEF14A filings of other companies and do not see an Exhibit 104 in their index.  Has it been determined that this is not needed for the proxy? Thanks

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  • Mike

    Hi Kimberly!

    This is still a bit of a grey area as far as what is "required" by the SEC for Proxy filings. Exhibit 104 is for a tagged cover page data but it is questionable if it needs to be included proxy filings, since they are not types that are included in the FAST Act forms. For example, for Form 8-K, the SEC has stated that if the exhibit index only contains the cover page 104 "exhibit", the exhibit index may be omitted.

    Cover Page Interactive Data Files required under Rule 406 of Regulation S-T should be identified as exhibit 104 in the exhibit index of an applicable filing.  If, however, the exhibit index of a Form 8-K would include only a Cover Page Interactive Data File as exhibit 104, and would not include any other exhibit, the staff will not object if the registrant does not add an exhibit index to the Form 8-K solely for the purpose of identifying the Cover Page Interactive Data File as an exhibit under Item 9.01 of Form 8-K

    We understand that question(s) had been submitted to the SEC to confirm Exhibit requirements, but are not yet aware of a response yet. We are keeping an eye on it, for sure, but one thing to note is that the SEC has said via an xbrl.us webinar that there is no "Cover Page tagging requirements" for this mandate.

    All that said, we'd recommend seeking your own legal team's advice on what you should do but as of right now it seems like its up to the filer to supply it. I'll add that if you do wish to include it in your index, as with all XBRL exhibits, hyperlinks should not be used.

    Hopefully that helps some. We'll keep you apprised of any new developments but let us know what questions you have in the meantime. Thanks again and have a super day!

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