Executive Security: What Should Your Proxy Disclosures Look Like?

Key Takeaways

• 64% S&P 100 disclose executive security perks
• ISS now tolerates disclosed security programs
• Proxy advisors require nature, benefit, assessment, process
• Compensation committee must approve rising security spend
• Clear CD&A disclosure reduces proxy advisor criticism

Summary

SEC Chairman Paul Atkins signaled that executive‑security perks may soon lose their special‑perk status, but existing disclosure rules remain in force for 2026. Companies are seeing rapid growth in security spending, with 64% of S&P 100 firms already reporting such perks. ISS has softened its stance, indicating it will not object if firms provide thorough proxy disclosures. Proxy advisors now expect disclosures to detail the program’s nature, shareholder benefit, assessment methodology, and arm‑length decision‑making process, prompting early involvement of compensation committees.

Pulse Analysis

Executive security spending has surged as CEOs confront heightened physical threats, sophisticated cyber attacks, and complex travel risks. The S&P 100 now reports security perks for nearly two‑thirds of its constituents, while the broader market lags behind. This acceleration reflects not only heightened risk awareness but also the expanding scope of services—from home monitoring to dedicated cybersecurity teams—making security a material component of total compensation packages.

Regulators and proxy advisors are tightening scrutiny. SEC Chair Paul Atkins hinted that treating security as a “perk” may be outdated, yet the current disclosure framework still applies. ISS, once critical of security expenses, has shifted to a more permissive stance, provided companies articulate clear rationales. Proxy advisors such as Glass Lewis and Institutional Shareholder Services now demand that proxy statements explain the security program’s nature, the direct benefit to shareholders, the assessment process (internal or third‑party), and the arm‑length decision‑making path. Failure to meet these expectations can trigger negative Say‑on‑Pay votes.

Practically, boards should engage compensation committees early when security budgets rise, ensuring rigorous risk assessments and alignment with shareholder interests. Detailed disclosures in the Compensation Discussion & Analysis (CD&A) should map the program’s objectives, cost justification, and governance controls. By documenting the evaluation methodology and decision hierarchy, firms can pre‑empt proxy‑advisor objections and reinforce investor confidence. As security costs continue to climb, transparent proxy reporting will become a cornerstone of robust executive compensation governance.