March 9, 2007
SEC Chair: “Overlawyered” Executive Compensation Disclosures
Yesterday, SEC Chairman Cox gave a speech during which he said that incoming executive compensation disclosures are in some cases suffering from “overlawyering” and need to be written in plain English – and that some explanations of executive compensation in proxy statements are running more than 40 pages, yet not telling investors enough about how the bosses are being paid. Having read a few CD&As myself so far this proxy season, I agree that some feel like they have considerable gaps when it comes to describing the company’s compensation arrangements.
The Chairman also said the SEC Staff would be electronically tagging the executive compensation data in proxy statements and posting the interactive data around June, which would allow the public to compare compensation data for several hundred of the largest companies.
Shareholder Access in ’08?
According to this WSJ article, SEC Chairman Cox indicated that the Commission has made progress towards proposing a shareholder access rule and is hopeful to have something adopted in time for next year’s proxy season.
Executive Compensation: House’s Financial Services Committee Hearing
As reflected in this WSJ article, there were no real surprises during yesterday’s House Financial Services Committee hearing on Rep. Barney Frank’s “say-on-pay” bill. Here is the prepared testimonies of the hearing witnesses – and here is a related Reuters’ article.
Internal Pay Equity Legislation: Another Angle for Legislators to Cap Pay
For those following our musings on CompensationStandards.com, you hopefully know that we have been touting internal pay equity as a simple balancing methodology to help handle the challenges of utilizing peer group benchmarking to set CEO pay levels.
Recently, two Maryland state senators, Paul Pinsky and Richard Madaleno Jr., have sponsored a bill to prohibt Maryland corporations from deducting executive pay as a business expense if it exceeds 30 times what the lowest-paid worker earns. I doubt this bill will go anywhere – and I don’t think legislating pay levels is the way to go – but it illustrates that pay practices need to change voluntarily before they are changed for you…