PRA Supporting Statement.PVP.Final

SUPPORTING STATEMENT FOR PAY VERSUS PERFORMANCE
This supporting statement is part of a submission under the Paperwork Reduction Act of
1995, 44 U.S.C. §3501, et seq.
A.

JUSTIFICATION
1. CIRCUMSTANCES MAKING THE COLLECTION OF INFORMATION
NECESSARY

In Release No. 34-95607,1 the Commission adopted amendments to implement Section
14(i) (“Section 14(i)”) of the Securities Exchange Act of 1934 (“Exchange Act”), as added by
Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“DoddFrank Act”). Section 14(i) directs the Commission to adopt rules requiring registrants to provide
disclosure of pay versus performance. The disclosure is required in proxy or information
statements in which executive compensation disclosure is required.
Specifically, the amendments require registrants to provide a table disclosing specified
executive compensation and financial performance measures for their five most recently
completed fiscal years. With respect to the measures of performance, a registrant is required to
report its total shareholder return (“TSR”), the TSR of companies in the registrant's peer group,
its net income, and a financial performance measure chosen by the registrant. Using the
information presented in the table, registrants are required to describe the relationships between
the executive compensation actually paid and each of the performance measures, as well as the
relationship between the registrant’s TSR and the TSR of its selected peer group. A registrant is
also required to provide a list of three to seven financial performance measures that it determines
are its most important performance measures for linking executive compensation actually paid to
company performance. Smaller reporting companies (“SRCs”) are subject to scaled disclosure
requirements under the rules.
The amendments contain “collection of information” requirements within the meaning of
the Paperwork Reduction Act of 1995 (“PRA”). The titles of the collections of information
impacted by the amendments are:
•
•

“Regulation 14A and Schedule 14A” (OMB Control No. 3235-0059); and
“Regulation 14C and Schedule 14C” (OMB Control No. 3235- 0057.

2. PURPOSE AND USE OF THE INFORMATION COLLECTION
The Commission adopted the above-referenced regulations and schedules pursuant to the
Exchange Act. The regulations and schedules set forth the disclosure requirements for proxy and
information statements filed by registrants to help investors make informed investment and
voting decisions.

1

Pay Versus Performance, Release No. 34-95607 (Aug. 25, 2022), a copy of which is attached.

The final rules are intended to implement Section 953(a) of the Dodd-Frank Act and satisfy
the requirements of Section 14(i). The Commission believes the disclosure mandated by Section
953(a) is intended to provide investors with more transparent, readily comparable, and
understandable disclosure of a registrant’s executive compensation, so that they may better
assess a registrant’s executive compensation program when making voting decisions, for
example when exercising their rights to cast advisory votes on executive compensation under
Exchange Act Section 14A or electing directors.
3. CONSIDERATION GIVEN TO INFORMATION TECHNOLOGY
The collection of information requirements of the amendments are set forth in the
affected rules and forms. The affected forms are filed electronically with the Commission using
the Commission’s Electronic Data Gathering, Analysis and Retrieval (“EDGAR”) system.
4. DUPLICATION OF INFORMATION
The Commission believes that the amendments do not duplicate, overlap, or conflict with
other federal rules.
5. REDUCING THE BURDEN ON SMALL ENTITIES
The amendments will affect some companies that are small entities that have a class of
securities that are registered under Section 12 of the Exchange Act but are not foreign private
issuers, registered investment companies, or emerging growth companies (“EGCs”). The
Commission performed a Final Regulatory Flexibility Act Analysis and estimated that there are
approximately 450 issuers that may be considered small entities and are potentially subject to the
final amendments. For purposes of the Regulatory Flexibility Act, under the Commission’s rules,
an issuer, other than an investment company, is a “small business” or “small organization” if it
had total assets of $5 million or less on the last day of its most recent fiscal year. In addition, an
investment company, including a business development company (“BDC”), is considered to be a
“small business” if it, together with other investment companies in the same group of related
investment companies, has net assets of $50 million or less as of the end of its most recent fiscal
year. The Commission believes that the final rules will affect some small entities that are BDCs
that have a class of securities registered under Section 12 of the Exchange Act. The Commission
estimates that one affected BDC may be considered a small entity.
The Commission expects the final rules to have an incremental effect on existing
reporting, recordkeeping and other compliance burdens for all issuers subject to the final rules,
including small entities. The Commission has provided some different and simplified compliance
requirements for smaller reporting companies, including small entities, taking into account their
resources. In particular, the Commission has scaled the disclosure requirements for SRCs in an
attempt to limit the compliance burden to which such companies will be subject.2
2

A “smaller reporting company” means, in the case of issuers required to file reports under Sections 13(a) or
15(d) of the Exchange Act, an issuer that is not an investment company, an asset-backed issuer, or a majorityowned subsidiary of a parent that is not a smaller reporting company and that: (1) had a public float of less than
$250 million (as of the last business day of the issuer’s most recently completed second fiscal quarter); or (2)

2

Under the final rules, SRCs are not required to provide a peer group TSR, a CompanySelected Measure, a Tabular List, or to disclose amounts related to pensions (for purposes of
calculating executive compensation actually paid). Because SRCs are not required to provide a
peer group TSR or Company-Selected Measure, they are similarly not required to provide
relationship descriptions with respect to those performance measures. In addition, because the
existing scaled definition of named executive officer (“NEO”) in Item 402 of Regulation S-K
applicable to SRCs applies for purposes of the new Item 402(v) disclosure, SRCs are required to
provide disclosure about fewer NEOs than non-SRC registrants. SRCs also are only required to
provide three years of disclosure (rather than five years) and are able to provide two years of
data, instead of three, in the first applicable filing after the rules become effective. An SRCs is
only required to provide the required Inline eXtensible Business Reporting Language (“XBRL”)
data beginning in the third filing in which it provides pay-versus-performance disclosure, instead
of the first.
6. CONSEQUENCES OF NOT CONDUCTING COLLECTION
Schedule 14A and Schedule 14C set forth the disclosure requirements for proxy and
information statements filed by issuers to help investors make informed investment decisions.
Less frequent collection of the information required by the proposed amendments would frustrate
the statutory intent of Section 14(i) of the Exchange Act because shareholders would have less
executive compensation information on which to base voting and investment decisions.
7. SPECIAL CIRCUMSTANCES
There are no special circumstances in connection with these amendments.
8. CONSULTATIONS WITH PERSONS OUTSIDE THE AGENCY
The Commission issued a release soliciting comment on the new “collection of
information” requirements and the associated paperwork burdens.3 The Commission’s
solicitation of public comments included estimating and requesting public comments on updated
burden estimates for all information collections under the OMB control numbers specified above
(i.e., both changes associated with the rulemaking and other burden updates). Comments on
Commission releases are generally received from registrants, investors, and other market
participants. In addition, the Commission and staff participate in ongoing dialogue with
representatives of various market participants through public conferences, roundtables and
had annual revenues of less than $100 million (as of the most recently completed fiscal year for which audited
financial statements are available) and either: (i) no public float (as of the last business day of the issuer’s most
recently completed second fiscal quarter); or (ii) a public float of less than $700 million (as of the last business
day of the issuer’s most recently completed second fiscal quarter). 17 CFR 240.12b-2; and 17 CFR 229.10.
3

See Pay Versus Performance, Release No. 34-74835 (Apr. 29, 2015) (the “Proposing Release”). The comment
period for the Proposing Release was reopened in 2022 to permit commenters to further analyze and comment
upon the proposed rules in light of developments since the publication of the Proposing Release and the
Commission’s further consideration of the Section 953(a) mandate. See Reopening of Comment Period for Pay
Versus Performance, Release No. 34-94074 (Jan. 27, 2022) (the “Reopening Release”).

3

meetings. All comments received on the proposal are available at
https://www.sec.gov/comments/s7-07-15/s70715.htm.
While several commenters provided comments on the potential costs of the proposed
rules, only one commenter specifically addressed the Commission’s PRA estimates, stating that
the Commission’s estimates of the man hour and cost burden of the rule on companies were
“grossly underestimated.”4 The Commission made some changes to the proposed amendments as
a result of comments received in response to the Proposing Release and the Reopening Release
and revised the estimates from the Proposing Release accordingly, taking into account the
changes and the comments received. The Commission considered all comments received prior to
publishing the final rules as required by 5 CFR 1320.11(f).
9. PAYMENT OR GIFT TO RESPONDENTS
No payment or gift has been provided to any respondents.
10. CONFIDENTIALITY
Documents submitted to the Commission are available to the public.
11. SENSITIVE QUESTIONS
No information of a sensitive nature will be required under these amendments. These
information collections collect basic Personally Identifiable Information (PII) that may include a
name and job title. However, the agency has determined that these information collections do
not constitute a system of record for purposes of the Privacy Act. Information is not retrieved by
a personal identifier. In accordance with Section 208 of the E-Government Act of 2002, the
agency has conducted a Privacy Impact Assessment (PIA) of the EDGAR system, in connection
with this collection of information. The EDGAR PIA, published on March 22, 2023, is provided
as a supplemental document and is also available at https://www.sec.gov/privacy.
12. /13. ESTIMATES OF HOUR AND COST BURDENS
The estimated burden hours and cost burden are made solely for the purposes of the
Paperwork Reduction Act. The cost burden is not derived from a comprehensive or even a
representative survey of the costs of Commission rules and forms.

4

See letter from National Association of Manufacturers, dated July 6, 2015.

4

PRA Table 1 summarizes the estimated effects of the amendments on the paperwork
burdens associated with the affected collections of information.
PRA Table 1. Estimated Paperwork Burden Effects of the Amendments
Estimated Burden Effect5
• 28 hour increase in compliance
burden for each Schedule 14A and
14C filed by registrants other than
SRCs

Final Amendments and Effects
Pay-versus-Performance Table:
•

•

5

Registrants other than SRCs: Requiring a
table containing the Summary
Compensation Table measure of total
compensation and the values of the
prescribed measure of executive
compensation actually paid for the
principal executive officer (“PEO”) and
as an average for the other NEOs, TSR
for both the registrant and its peer group,
the registrant’s net income, and a
Company-Selected Measure. The
calculation of executive compensation
actually paid includes adjustments from
the Summary Compensation Table
amounts with respect to equity awards
and pension benefits. Related footnote
disclosure of the amounts that were
deducted from, and added to, the
Summary Compensation Table total and
of valuation assumptions also required.
Registrants required to separately tag the
values disclosed in the table, block-text
tag the footnote disclosure, and tag
specific data points (such as quantitative
amounts) within the footnote disclosures,
all in Inline XBRL. Estimated burden
increase: 20 hours per schedule.

•

17 hour increase in compliance
burden for each Schedule 14A and
14C filed by SRCs

SRCs: Requiring a table containing the
Summary Compensation Table measure
of total compensation and the values of
the prescribed measures of executive
compensation actually paid for the PEO
and as an average for the other NEOs,
TSR for the registrant, and the registrant’s
Estimated effect expressed as an increase of burden hours on average and derived from Commission staff
review of samples of relevant sections of the affected forms and schedules.

5

Estimated Burden Effect5

Final Amendments and Effects
net income. The calculation of executive
compensation actually paid includes
adjustments from the Summary
Compensation Table amounts with
respect to equity awards. Related footnote
disclosure of the amounts that were
deducted from, and added to, the
Summary Compensation Table total and
of valuation assumptions also required.
Registrants required to separately tag the
values disclosed in the table, block-text
tag the footnote disclosure, and tag
specific data points (such as quantitative
amounts) within the footnote disclosures,
all in Inline XBRL. Estimated burden
increase: 15 hours per schedule.
Relationship Disclosure:
•

Registrants other than SRCs: Requiring a
clear description of (i) the relationships
between executive compensation actually
paid to its PEOs and, on average, its other
NEOs and the registrant’s TSR, (ii) the
relationships between executive
compensation actually paid to the
registrant’s PEOs and, on average, its
other NEOs and the net income of the
registrant, (iii) the relationships between
executive compensation actually paid to
the registrant’s PEOs and, on average, its
other NEOs and the registrant’s
Company-Selected Measure, and (iv) the
relationships between the registrant’s TSR
and its peer group TSR, in each case over
the registrant’s five most recently
completed fiscal years. Registrants
required to block-text tag the relationship
disclosure in Inline XBRL. Estimated
burden increase: 4 hours per schedule.

•

SRCs: Requiring a clear description of (i)
the relationships between executive
compensation actually paid to its PEOs
and, on average, its other NEOs and the
6

Estimated Burden Effect5

Final Amendments and Effects
registrant’s TSR and (ii) the relationships
between executive compensation actually
paid to the registrant’s PEOs and, on
average, its other NEOs and the net
income of the registrant, in each case over
the registrant’s three most recently
completed fiscal years. Registrants
required to block-text tag the relationship
disclosure in Inline XBRL. Estimated
burden increase: 2 hours per schedule.
Tabular List:
•

Requiring a registrant that is not an SRC
to disclose an unranked Tabular List of
the most important financial performance
measures used by it to link executive
compensation actually paid to its PEOs
and NEOs during the fiscal year to
company performance. Registrants
required to block-text tag the Tabular List
in Inline XBRL. Estimated burden
increase: 4 hours per schedule.

The estimated burden increase associated with the final rules for both SRCs and nonSRCs reflects an increase from the estimated average burden increase of 15 hours for all
registrants that was included in the Proposing Release. The increase reflects adjustments made
due to comments received and accounts for several modifications relative to the proposed rules,
including with respect to the calculation of executive compensation actually paid, the addition of
net income and the Company-Selected Measure as performance measures to be included in the
table, and related relationship disclosures with respect to those performance measures, and the
requirement to provide the Tabular List.
Because these estimates are averages of the burdens for all such companies in each
respective category, the burden could be more or less for any particular company, and may vary
depending on a variety of factors, such as the complexity of companies’ compensation plans or
the degree to which companies use the services of outside professionals, or internal staff and
resources, to tag the data in Inline XBRL. This burden, as discussed in more detail below, will be
added to the current burdens for Schedule 14A and Schedule 14C.
The Commission does not believe that the amendments will change the frequency of
responses to the existing collections of information; rather, it estimates that the amendments will
change only the burden per response.

7

The new burden hour and cost estimates were calculated by estimating the total amount
of time it would take a registrant to prepare and review the disclosure requirements contained in
the final rules, as well as the average hourly rate for outside professionals who assist with such
preparation. The burden estimates were calculated by multiplying the estimated number of
responses by the estimated average amount of time it would take a registrant to prepare and
review disclosure required under the final amendments.
For purposes of the PRA, the burden is to be allocated between internal burden hours and
outside professional costs. For the proxy and information statements on Schedule 14A and
Schedule 14C, the Commission estimates that 75% of the burden of preparation is carried by the
company internally and that 25% of the burden of preparation is carried by outside professionals
retained by the company at an average cost of $400 per hour.6 The portion of the burden carried
by outside professionals is reflected as a cost, while the portion of the burden carried by the
company internally is reflected in hours.
The Commission estimates that about 1,275 EGCs are required to file proxy statements
on Schedule 14A or information statements on Schedule 14C, in which executive compensation
disclosure pursuant to Item 402 of Regulation S-K is required. The Commission has adjusted the
estimates to deduct the filings attributed to these companies from the estimate because EGCs are
not subject to the final rules. The table below sets forth the Commission’s estimates of the
number of current filings on the schedules that will be affected by the final rules. It used this data
to extrapolate the effect of these changes on the paperwork burden for the listed collections of
information.
PRA Table 2: Estimated Number of Affected Filings
Form

Current Annual Responses in
PRA Inventory7

Estimated Number of
Affected Filings8

Schedule 14A

6,369

4,968

Schedule 14C

569

444

6

The Commission recognizes that the costs of retaining outside professionals may vary depending on the nature
of the professional services, but for purposes of this PRA analysis, it estimated that such costs would be an
average of $400 per hour. In December 2022, the Commission increased the cost estimate for Schedules 14A
and 14C to $600 per hour to adjust the estimate for inflation from August 2006.

7

The number of responses reflected in the table equals the three-year average of the number of schedules filed
with the Commission and currently reported by the Commission to OMB.

8

Based on the approximately 1,275 EGCs that the Commission estimates are required to file proxy statements on
Schedule 14A or information statements on Schedule 14C relative to the estimated total number of
approximately 4,530 registrants subject to the final rules, it is estimated that approximately 22% of the
registrants filing Schedules 14A or 14C are EGCs, which are not subject to the final rules. In estimating the
hours and service costs, the Commission has removed those filers from the Current Annual Responses totals for
Schedule 14A and Schedule 14C. As a result, the Commission expects the final rules to affect approximately
4,968 Schedule 14A filings [6,369 x 0.22 = 1,401; 6,369 – 1,401 = 4,968] and approximately 444 Schedule 14C
filings [569 x 0.22 = 125; 569 – 125 = 444].

8

In deriving its estimates, the Commission recognizes that the burdens will likely vary
among individual registrants based on a number of factors, including the size and complexity of
their executive compensation arrangements. The Commission believes that some registrants will
experience costs in excess of this average (particularly in the first year of compliance with the
final rules) and some registrants may experience less than the average costs. PRA Table 3 below
illustrates the incremental change to the total annual compliance burden of affected collections of
information, in hours and in costs, as a result of the final amendments.
PRA Table 3: Calculation of the Incremental Change in Burden Estimates
of Current Responses Resulting from the Final Amendments
Collection
of
Information

Filed
By9

Estimated
Number
of
Affected
Responses
(A)

Burden
Hour
Increase
per
Affected
Response
(B)

Increase in
Burden
Hours for
Current
Affected
Responses
(C)
=(A) x (B)

Schedule
14A

NonSRC

2,981

28

83,468

Schedule
14A
Schedule
14A
(Total)
Schedule
14C
Schedule
14C

SRC

1,987

17

33,779

Schedule
14C
(Total)

4,968

NonSRC
SRC

117,247

266

28

7,448

178

17

3,026

444

10,474

9

Increase in
Company
Hours for
Current
Affected
Responses
(D)
=(C) x 0.75

Increase in
Professional
Hours for
Current
Affected
Responses
(E)
=(C) x 0.25

Increase in
Professional
Costs for
Current
Affected
Responses
(F)
= (E) x $400

87,935

29,312

$11,724,800

7,856

2,619

$1,047,600

Based on 2021 filings, SRCs represent about 41 percent (1,860 out of 4,530) of the affected registrants. The
Commission assumes for purposes of the PRA estimates that 60 percent of each affected collection of information
was filed by non-SRCs and 40 percent by SRCs.

9

The following PRA Table 4 summarizes the requested paperwork burden, including the
estimated total reporting burdens and costs, under the final amendments.
PRA Table 4. Requested Paperwork Burden under the Final Amendments

Schedule
14A

6,369

762,901

$101,685,312

Program Change
Number
Increase
of
in
Affected
Company
Responses Hours
(D)
(E)10
4,968
87,935

Schedule
14C

569

55,192

$7,359,744

444

Collection
of
Information

14.

Current Burden
Current
Current
Annual
Burden
Responses Hours
(A)
(B)

Current Cost
Burden (C)

7,856

$11,724,800

Revised Burden
Annual
Burden
Responses Hours
(G) = (A)
(H) =
(B) +
(E)
6,369
850,836

$1,047,600

569

Increase in
Professional
Costs (F)11

63,048

Cost Burden
(I) =
(C) + (F)

$113,410,112

$8,407,344

COSTS TO FEDERAL GOVERNMENT

The annual cost of reviewing and processing disclosure documents, including registration
statements, post-effective amendments, proxy statements, annual reports and other filings of
operating companies amounted to $125,800,170 million in fiscal year 2021, based on the
Commission’s computation of the value of staff time devoted to this activity and related
overhead.
15.

REASON FOR CHANGE IN BURDEN

As explained in further detail in Items 1, 12 and 13 above, the Commission expects that
changes in burden for proxy and information statements on Schedule 14A and Schedule 14C will
result from the amendments. The final rules are intended to implement Section 953(a) of the
Dodd-Frank Act and satisfy the requirements of Section 14(i). The Commission believes the
disclosure mandated by Section 953(a) is intended to provide investors with more transparent,
readily comparable, and understandable disclosure of a registrant’s executive compensation, so
that they may better assess a registrant’s executive compensation program when making voting
decisions, for example when exercising their rights to cast advisory votes on executive
compensation under Exchange Act Section 14A or electing directors.
16.

INFORMATION COLLECTION PLANNED FOR STATISTICAL PURPOSES
The information collections do not employ statistical methods.

10

From Column (D) in PRA Table 3.

11

From Column (F) in PRA Table 3.

10

17.

APPROVAL TO OMIT OMB EXPIRATION DATE

The Commission requests authorization to omit the expiration date on the electronic
version of the forms. Including the expiration date on the electronic version of the forms will
result in increased costs, because the need to make changes to the forms may not follow the
application’s scheduled version release dates. The OMB control number will be displayed.
18.

EXCEPTIONS TO CERTIFICATION FOR PAPERWORK REDUCTION ACT
SUBMISSIONS
There are no exceptions for the Paperwork Reduction Act submissions.

B.

STATISTICAL METHODS
The information collections do not employ statistical methods.

11

Schedule 14A Short Statement
The amendments implement Section 14(i) of the Securities Exchange Act of 1934, as
added by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Section 14(i) directs the Commission to adopt rules requiring registrants to provide disclosure of
pay versus performance in proxy or information statements in which executive compensation
disclosure is required. As a result of these amendments, the Commission estimates that the
impact will be an increase in the paperwork burden for affected entities. For purposes of the
PRA, the Commission estimates that, for Regulation 14A and Schedule 14A, the amendments
will result in a net increase of 87,935 burden hours, and a net increase of $11,724,800 in cost
burden for the services of outside professionals.

12

Schedule 14C Short Statement
The amendments implement Section 14(i) of the Securities Exchange Act of 1934, as
added by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Section 14(i) directs the Commission to adopt rules requiring registrants to provide disclosure of
pay versus performance in proxy or information statements in which executive compensation
disclosure is required. As a result of these amendments, the Commission estimates that the
impact will be an increase in the paperwork burden for affected entities. For purposes of the
PRA, the Commission estimates that, for Regulation 14C and Schedule 14C, the amendments
will result in a net increase of 7,856 burden hours, and a net increase of $1,047,600 in cost
burden for the services of outside professionals.

13