SEC Proposes Ending Say-on-Pay and Compensation Disclosure for 81% of Public Companies

On May 19, 2026, the U.S. Securities and Exchange Commission proposed a sweeping regulatory overhaul that would exempt approximately 81% of publicly traded companies from holding mandatory "say-on-pay" shareholder votes.[1][2]

The proposed rulemaking represents the most significant shift in public company reporting requirements in two decades. By redefining how the agency categorizes issuers, the SEC aims to dramatically reduce the executive compensation disclosure burden for thousands of mid-sized and newly public firms.[3][6]

At the core of the proposal is a simplification of the SEC's filing tiers. The current system, which sorts companies into five overlapping categories based on revenue and public float, would be consolidated into just two: Large Accelerated Filers (LAFs) and Non-Accelerated Filers (NAFs).[2][5]

Under the new framework, any company with a public float below $2 billion would be classified as an NAF. For these newly minted NAFs, the compliance relief is substantial. They would no longer be required to hold advisory votes on executive compensation, the frequency of those votes, or golden parachute arrangements during mergers and acquisitions.[5][6]

The disclosure reductions extend deep into the annual proxy statement. NAFs would be exempt from publishing a Compensation Discussion and Analysis (CD&A) narrative, a detailed section that often spans dozens of pages to explain the philosophy behind executive payouts.[1][4]

Furthermore, these companies would no longer need to calculate and disclose their CEO pay ratio or the complex "pay versus performance" tables introduced in recent years. Historical compensation reporting would be scaled back to cover only three named executive officers over a two-year period, rather than five officers over three years.[1][7]

Despite the broad applicability of the rule—affecting roughly 4,300 companies—the SEC emphasized that the macroeconomic impact is highly concentrated. The 19% of companies that would remain LAFs represent 93.5% of the total U.S. public market float, meaning the S&P 500 and most of the S&P 400 would continue to face the full disclosure regime.[3][7]

The Commission framed the deregulatory action as a necessary step to enhance capital formation. By lowering the ongoing compliance costs associated with being a public company, the SEC hopes to encourage more initial public offerings and reverse a long-term decline in the number of listed domestic firms.[2][6]

However, the proposal sets up a potential clash between regulatory minimums and investor expectations. Institutional investors and proxy advisory firms have spent the last decade building sophisticated governance models that rely heavily on the standardized data provided in CD&As and say-on-pay votes.[4][5]

Without a dedicated say-on-pay ballot item, investors dissatisfied with executive compensation packages may resort to voting against the reelection of compensation committee members—a binding and potentially more disruptive mechanism for expressing discontent.[1][4]

For newly public companies, the rules would effectively create a five-year "on-ramp" during which they could operate as NAFs regardless of their public float, extending the relief currently available only to emerging growth companies.[2][5]

The SEC is accepting public comments on the proposal through July 20, 2026. If adopted by the end of the year, the new framework could take effect in time for the 2027 proxy season, leaving corporate boards to decide whether to embrace the scaled-back disclosures or voluntarily maintain their current reporting practices to preserve shareholder goodwill.[3][6]