September 30, 2004

How Much CEO Pay is Too Much? How About Half a Billion?

Yesterday, we posted a practice pointer on from Paul Hodgson of The Corporate Library about a company which has paid a total of $500 million to three separate CEOs over the past decade. Yes, this is an extreme (and our October 20th conference is not about extremes – it is about practical guidance for all the situations that are not extreme) – but it is quite a shocker and makes for interesting reading.

Most importantly – particularly considering the SEC’s interest in this area recently (ie. likely to be more GE-like SEC Enforcement disclosure actions) – Paul notes this amount includes a $21 payment related to the huge $111 million “golden hello” that he previously had not been aware of – the $21 million was paid to a GE subsidiary to buy Wendt out of his confidentiality agreement and it had not been disclosed in the company’s proxy statement or in the filed employment contract. But Paul did manage to dig out a tiny paragraph disclosing the amount in a massive pre-bankruptcy Form 10-K.

NYSE Proposes Procedures for SEC Filing Deficiencies

Yesterday, the SEC proposed an amendment by the NYSE that would codify existing procedures followed by companies that fail to timely file their annual reports with the SEC (i.e. 10-Ks, 20-Ks, etc.; doesn’t apply to the glossy annual reports). According to the proposal, once a company has been notified by the NYSE that it is late:

– Within 5 days of receipt of this notification, the company would be
required to (a) contact the NYSE to discuss the status of the annual
report filing, and (b) if it has not already done so, issue a press
release disclosing the status of the filing.
– If the company fails to issue this press release in a timely manner, the NYSE would itself issue a press release stating that the company has failed to timely file its annual report with the SEC.
– During the 9-month period from the filing due date, the NYSE would monitor the company and the status of the filing, including through contact with the company, until the annual report is filed.
– If the company fails to file the annual report within 9 months from the filing due date, the NYSE would be permitted, in its sole discretion, to allow the company’s securities to be traded for up to an additional 3-month trading period depending on the company’s specific circumstances.
– If the NYSE determines that an additional trading period of up to 3 months is not appropriate, suspension and delisting procedures would commence.