February 17, 2005

A Separate Executive Compensation Filing – the PAY-K

Here is an excerpt from Mark Borge’s “The Compensation Disclosure Blog” on (Mark continues to amaze with his regular analysis of recent disclosures; this particular item is more newsworthy):

Yesterday’s Wall Street Journal features an interesting article on page C1 (subscription required) about the frustrations with the current executive compensation disclosure system. The article notes how the WSJ needed to retain an actuary and an excise-tax expert to calculate the pay due to Gillette’s CEO as a result of the company’s pending merger with Proctor & Gamble. Even then, the final figure was significantly different ($12 million) from that calculated by another paper’s expert.

The author suggests that part of the problem stems from the disparate ways executive compensation information is currently reported — some in the proxy statement, some in Forms 4, and, now, some in interim filings on Form 8-K. He also notes the lack of a single location where all compensation, including retirement benefits and accumulated deferred compensation, must be reported.

The solution? He suggests that the SEC develop a separate report for disclosing executive compensation – the “Pay-K” – that would be updated throughout the year as needed. It’s an interesting idea, and certainly one that would simplify the piecemeal disclosure situation we’re now in with the new Form 8-K requirements.

Surprises Caused by Audit Confirmation Letters

Having trouble with audit confirmation letters? Get help from this interview
with Clark Fitzgerald and David Howard on Surprises Caused by Audit Confirmation Letters.

Nasdaq’s Rulemaking for Non US-Companies

Nasdaq has filed a rule change with the SEC – which will be effective around March 3rd – that would modify its rules to allow foreign private issuers to follow home country practice in lieu of certain requirements of the Nasdaq corporate governance rules without the need to seek an individual exemption from Nasdaq.

The Nasdaq rule filing states that, except for certain provisions of Rule 4350, a foreign private issuer would be allowed to rely on home country practices in lieu of the Nasdaq corporate governance requirements by providing a letter from outside counsel in that issuer’s home country certifying that the issuer’s practices are not prohibited by the home country’s laws and making appropriate disclosures in its annual reports filed with the SEC and, if applicable, in a registration statement.

Nasdaq also filed a proposal with the SEC that would modify its rules to require that foreign private issuers must publish semi-annual financial information in a press release or on a Form 6-K. Nasdaq proposes that the new requirement be effective for interim periods ending after January 1, 2006.