On May 19, 2026, the Securities and Exchange Commission proposed Release No. 33-11419 — what the agency has called the most significant overhaul of the public company reporting framework in roughly two decades. At its core, the proposal redefines requirements for a large accelerated filer (or “LAF”) versus everyone else, and in doing so would substantially reduce executive compensation disclosure obligations for the large majority of public companies.
Despite our headline, the proposed changes have much more complex implications for boards and their committees focused on compensation matters. We cover some of this at a high-level in this article but welcome questions you may have in reading.
A Structure Overhaul
The proposal doesn’t look to rewrite the substance of Item 402 of Regulation S-K. Instead, it changes which companies are subject to which version of it. Currently, the SEC sorts companies into multiple filer categories – LAF, accelerated filer, non-accelerated filer, smaller reporting company (“SRC”), and emerging growth company (“EGC”); each with some nuances in the disclosure requirements they must comply with. The proposal would instead create two main categories:
- LAFs — companies with public float above a new $2 billion threshold (up from $700 million today)
- Non-accelerated filers (or “NAFs”) — everyone else, including all newly public companies, which would be treated as NAFs for up to 60 months regardless of float
NAFs would become eligible for the scaled compensation disclosure currently reserved for SRCs and EGCs. The SEC estimates that roughly 81% of public companies would qualify as NAFs under the new framework — though those companies represent only about 6.5% of total U.S. market float. Companies representing the other 93.5% of float would remain LAFs, subject to the full current disclosure regime unchanged.
That last point matters for compensation committee planning: this proposal, as drafted, leaves the largest and most closely watched companies’ compensation disclosure exactly where it is…for now. The deregulatory effect as proposed would be concentrated among smaller and newly public companies as part of a broader push under SEC Chairman Paul Atkins to lower the cost of going and staying public, but we don’t expect the agenda to stop there forever.
Anticipated Changes for NAFs
If adopted as proposed, NAFs would no longer be required to provide:
- A Compensation Discussion & Analysis (CD&A) narrative
- Disclosure for more than three named executive officers (down from up to five)
- More than two years of Summary Compensation Table history (down from three)
- Several supporting tables, including grants of plan-based awards, option exercises and stock vested, pension benefits, nonqualified deferred compensation, and compensation committee interlocks
- Say-on-pay, say-on-frequency, and say-on-golden-parachute advisory votes
Any NAF that wants to keep providing some or all of this information voluntarily would remain free to do so. Here is where things may get interesting for NAFs – our understanding at present is institutional investors may not be interested in willingly changing their governance evaluation frameworks that are currently built off of a larger dataset. If NAFs choose to only comply with regulatory requirements, such investors may be quicker to pull support from incumbent board members up for reelection and/or launch more proxy fights.
Investor Pushback is Already Underway
Speaking of investors, said population in the market has already communicated concerns with the proposed changes en masse. Comment letters submitted so far include concerns on the loss of say-on-pay for companies below the $2 billion threshold, arguments that the proposed transition period is unnecessarily long and more. With the comment period ending July 20th, we expect to see more commentary and concern on the proposed changes from institutional investors and proxy advisory firms alike. And if changes are adopted as proposed – which is the current expectation – we anticipate these market participants will be updating their own voting policies to address gaps the rule would leave behind. The result is an effort to reduce regulatory burden on public companies in the hopes of spurring more activity of companies going public that will instead result in more changes that public issuers have to prepare for as they look ahead to 2027.
Questions Compensation Committees Should be Asking Now
The summer window is a great time for compensation committees and management teams alike to take advantage of the “down time” to further understand what changes may lie ahead from a disclosure standpoint, as well as what their key investors’ views are on the matter. Below are some of the questions we have been discussing with clients:
- Where does our company likely fall under the new $2 billion LAF threshold, based on a two-year average public float test — and does that change our disclosure obligations at all?
- If we would qualify as an NAF, which disclosures (CD&A, supporting comp tables, etc.) do we want to keep voluntarily, and why?
- Can we clearly explain our compensation philosophy in plain language, independent of what’s legally required?
- Are we prepared for proxy advisors and institutional investors to expect more than the new minimum, especially if we scale back required disclosure?
- Do we have this item included in our shareholder engagement agendas where appropriate?
Looking Ahead
This potential structural reset has numerous ramifications for the public markets and those participating in them. For most committees, the near-term task is to be informed and prepared for what would result from implemented changes, and to be prepared to address this potential issue with shareholders during engagement sessions. The companies that treat this as a governance decision, not just a compliance one, will be better positioned regardless of where the final rule lands.