In Depth
Named executive officers (NEOs) are the specific individuals whose compensation is individually disclosed in the proxy statement's Summary Compensation Table. SEC Regulation S-K Item 402 defines the NEO group as the principal executive officer (PEO, typically the CEO), the principal financial officer (PFO, typically the CFO), and the three other most highly compensated executive officers who were serving as executive officers at the end of the fiscal year and whose total compensation exceeded $100,000. If the company had multiple CEOs or CFOs during the year (due to transitions), all individuals who served in those roles must be included, potentially expanding the NEO group beyond five individuals. The NEO determination is based on total compensation as reported in the Summary Compensation Table, which means the identity of the three non-PEO/PFO NEOs can change from year to year as relative pay levels shift. For each NEO, the proxy statement must disclose three years of compensation data in the SCT, along with supplementary tables showing equity grants, outstanding awards, option exercises, pension benefits, and deferred compensation. Additionally, the proxy statement must describe potential payments upon termination or change of control for each NEO. The CD&A section discusses compensation decisions for the NEO group as a whole, with particular focus on the CEO given the compensation committee's unique role in setting CEO pay (typically without management present during deliberations). Understanding who qualifies as an NEO is important because it determines the scope of mandatory compensation disclosure and the executives covered by the company's clawback policy.