TheCorporateCounsel.net

From Saturday’s NY Times comes this blurb below illustrating why care should be taken to disclose all executive compensation in your proxy disclosures (as the SEC Staff has been urging since Corp Fin Director Alan Beller’s speech at our 1st Annual Executive Compensation Conference). The point being – what will be your board’s reaction to your disclosure being criticized in the media?

“In a federal filing last week, Wachovia disclosed what Wallace D. Malone Jr., the former chief executive of SouthTrust Bank — which Wachovia bought in November 2004 — would receive now that he is retired. At first glance, the payout appeared to be worth some $135 million.

Omitted from the filing were two figures that bring that number up considerably. The first is about $54 million worth of Wachovia shares held in a 401(k) for Mr. Malone; the company put them in a paragraph headed ‘miscellaneous.’ And $8.5 million in accelerated stock options granted in 2005 were disclosed in similarly vague terms.

Mary Eshet, a spokeswoman, said the 401(k) benefit, which the company contributed to, was ‘personal retirement savings — the same benefit available to all employees — and it is not customary to disclose that type of benefit in a filing.’ She said the $8.5 million was not disclosed because it was immaterial.

Brian Foley, a compensation specialist in White Plains who uncovered these omissions, found them intriguing. ‘In whose world,’ he asked, ‘are an ex-executive’s $54 million 401(k) benefit and $8.5 million in options not worth quantifying?'”

Mr. Malone’s windfall has earned the scorn of quite a few newspapers, including the Charlotte Observer (“Scalping Shareholders“) and the San Jose Mercury (“Parting pay still sweet for execs“) – and even the Wisconsin Technology Network (“What color is your CEO’s parachute?“).

Will Mr. Malone Surface Next Year Disclosurewise?

If the SEC’s proposals are adopted, we can assume that Mr. Malone will show up next year as one of the departed NEOs for whom disclosure will be required – because his severance will go into the “All Other Compensation Column” and on a total compensation comparison, would put him in the top five. If adopted as proposed, the new rules nearly guarantee that any executive – not just the CEO – who leaves during the year with a large severance package is going to wind up in the following year’s “Summary Compensation Table.”

Transcript Posted: Underwriting Agreements/Opinions After the ’33 Act Reform

We have posted the transcript for last week’s popular webcast: “Underwriting Agreements and Legal Opinions After the ’33 Act Reform.”