Companies will have to disclose whether executives and directors can hedge against declines in their companies’ stock, following a vote by U.S. securities regulators yesterday, the Wall Street Journal reported. The Securities and Exchange Commission completed a long-delayed post-crisis rule that is aimed at giving investors more information about whether executives are skirting company requirements that they hold stock for the long-term. Executives will now have to disclose hedging contracts that would protect their compensation from their own firms’ poor performance. “These disclosures in themselves, and in combination with our officer and director purchase and sale disclosure requirements, should bring increased clarity to share ownership and incentives that will benefit our investors, registrants, and our markets,” SEC Chairman Jay Clayton said in a statement. The rule, one of a dozen provisions in the 2010 Dodd-Frank financial law that sought to rein in executive pay after the financial crisis, has languished since it was proposed in 2015. Following Wednesday’s action, four of those rules remain uncompleted. Rules still outstanding include one that would give shareholders the ability to assess executive pay relative to a company’s financial performance.
