August 28, 2003

The battle over the executive

The battle over the executive compensation practices at Siebel Systems looks like its coming to an end with the settlement of a lawsuit brought by the Louisiana Teachers’ Retirement System – yet another sign of how far institutional investors will now go to rein in excessive compensation, particularly in Silicon Valley. Siebel in particular has been targeted for quite some time by a variety of investors, including the AFSCME.

One of the more curious governance reforms in the Siebel settlement is the committment to provide better disclosure about how the compensation committee makes its executive compensation determinations. Its not clear if this means that the committee will provide more details in its report than required under Item 402(k) of Regulation S-K – but a cursory review of Siebel’s 2003 Comp Committee Report shows that its current disclosure practices are not too far off the norm. So investors – and perhaps the SEC staff – may well be paying closer attention to these reports next proxy season.