Pay Versus Performance: What Compensation Actually Paid Means

Starting with proxy statements covering fiscal 2022, companies added a new table that most investors had never seen before: Pay Versus Performance. It sits next to the long familiar Summary Compensation Table, uses some of the same inputs, and still arrives at a different number for what an executive was paid.

This guide explains where the rule comes from, what the table contains, and how it differs from the Summary Compensation Table covered in how to read the Summary Compensation Table.

Where the rule comes from

The SEC adopted Item 402(v) of Regulation S-K in August 2022 to implement a disclosure requirement that Congress added to the Exchange Act. The rule applies to proxy and information statements covering fiscal years ending on or after December 16, 2022, so calendar year companies first included it in their 2023 proxy statements. It applies to most reporting companies, with scaled requirements for smaller reporting companies, and does not apply to foreign private issuers, registered investment companies, or emerging growth companies.

What the table reports

For each covered fiscal year, the Pay Versus Performance table reports:

• The Summary Compensation Table total for the principal executive officer.
• Compensation actually paid to the principal executive officer.
• The average Summary Compensation Table total for the other named executive officers as a group.
• The average compensation actually paid to the other named executive officers as a group.
• Total shareholder return for the company.
• Peer group total shareholder return, using the peer group disclosed elsewhere in the filing.
• Net income.
• A company selected measure, a financial performance measure the company itself picks as most important to linking pay to performance, other than total shareholder return and net income.

Why compensation actually paid differs from the total column

The Summary Compensation Table values stock and option awards at their grant date fair value, the value calculated under accounting rules at the moment the award was granted. Compensation actually paid starts from that same total but adjusts the equity components to reflect value at the end of the fiscal year, at vesting, or during the year depending on whether the awards are still outstanding, vested that year, or forfeited. It makes similar adjustments to pension related amounts.

The result is a figure that tracks what the equity portion of pay was actually worth at points closer to when the executive could realize it, rather than frozen at the grant date. In a year when the stock price rises after a large grant, compensation actually paid can be higher than the Summary Compensation Table total. In a year when the stock falls, it can be lower, and an executive can even show a negative or near zero compensation actually paid figure in a year the stock price dropped sharply, even though the Summary Compensation Table total for that year was positive.

A required description of the relationship

Alongside the table, companies must describe, in narrative or graphical form, the relationship between compensation actually paid and each of total shareholder return, net income, and the company selected measure, and also compare their own total shareholder return against their peer group's. That section is where a company explains, in its own words, whether its pay moved with its performance over the five year window.

How this differs from the Summary Compensation Table

Reading them side by side is more useful than reading either alone. A large Summary Compensation Table total driven by a multi-year grant can look very different once Pay Versus Performance restates that same grant at year end value.

Pulling the figures as data

curl "https://secfeedapi.com/v1/pay-vs-performance?ticker=NVDA" \
  -H "Authorization: Bearer YOUR_API_KEY"

In Python:

from secfeed import Client

sf = Client("YOUR_API_KEY")
rows = sf.pay_vs_performance(ticker="NVDA")
for row in rows:
    print(row["year"], row["peo_actually_paid"], row["total_shareholder_return"])

Each row covers one fiscal year with the PEO and average other NEO figures, total shareholder return, peer group return, net income, and the company selected measure, parsed from the filing's own table. Full field list at /docs/#v1-pay-vs-performance.

Frequently asked questions

What is Pay Versus Performance disclosure?

A standardized table required by Item 402(v) of Regulation S-K that shows executive pay alongside company performance measures, covering the five most recently completed fiscal years, for proxy statements covering fiscal years ending on or after December 16, 2022.

How is compensation actually paid different from total compensation?

Total compensation in the Summary Compensation Table values equity awards at their grant date. Compensation actually paid adjusts those same awards toward their value at fiscal year end, at vesting, or during the year the award was outstanding, so the two figures can diverge, sometimes significantly, for the same executive and year.

Can compensation actually paid be negative?

Yes. Because the equity adjustment tracks changes in value over the year, a sharp stock price decline can produce a negative or near zero compensation actually paid figure even when the Summary Compensation Table total for the same year was clearly positive.

Does every public company have to disclose Pay Versus Performance?

Most reporting companies do, with scaled requirements for smaller reporting companies. Foreign private issuers, registered investment companies, and emerging growth companies are excluded from the requirement.

Where do I find the company selected measure?

It is named and defined in the company's own Pay Versus Performance disclosure in its proxy statement. Companies choose a financial performance measure, other than total shareholder return and net income, that they consider most important to how pay links to performance.