January 11, 2006

More on the SEC’s Upcoming Executive Compensation Proposals

More details about next Tuesday’s proposals continue to be reported as the SEC held a press briefing yesterday to share more information about the proposals with journalists after the WSJ scooped everyone yesterday. In his “Compensation Disclosure Blog,” Mark Borges does an excellent job analyzing the information that has been gleaned to date.

Today’s WSJ continues to report on this hot topic, including these two articles: “They Say Jump: SEC Plans Tougher Pay Rules” and “Memo to Activists: Mind CEO Pay.”

Bear in mind that the SEC’s proposals will be far-reaching, extending beyond proxy disclosures to 8-Ks, etc. In other words, the SEC intends to address any areas that intersect with executive pay. Alan Dye will spend quite a bit of time specifically on 8-K comp disclosures on the January 31st webcast: “Meeting the SEC’s New Expectations: Real Life Examples (and Explanations).”

More Responsible CEO Actions in the Compensation Area

On, we have just posted this 8-page conference summary, which was recently dropped in the mail to subscribers of The Corporate Counsel. The summary provides a synopsis of the practical implementation guidance provided at the “2nd Annual Executive Compensation Conference” from last Fall.

We also continue to add to our list of “CEOs that Have Set an Example,” including the actions noted in this Sunday NY Times article, which is repeated below:

“Skeptical about claims that soaring executive pay just reflects the value that the market places on talent? Consider this: Marsh Supermarkets, a publicly traded chain in Indianapolis, has terminated its supplemental executive retirement plans and rewritten the employment contracts of top executives to pare generous severance in the event the company is sold.

Don E. Marsh, the chairman and chief executive, said the changes would save Marsh’s shareholders $28 million. The company, in a press release, characterized the cuts as a “show of commitment to the shareholders and employees.”

It also may have been an acknowledgment of reality. Marsh, which lost $3.4 million in the quarter ended Oct. 15 on sales of $549.6 million, is trying to sell itself, and the hefty severance packages were not encouraging bidders. The stock has fallen 25 percent since Marsh announced the loss.

Don’t worry, though. The men covered by the executives-only plan – Mr. Marsh; his brother, William L. Marsh, the president and chief operating officer; P. Lawrence Butt, the corporate counsel; Jack J. Bayt, president of one division; and Douglas W. Dougherty, the finance chief – would still get to split almost $19 million that the company already set aside for them.”

Handling Disclosures of Security Breaches

In this podcast, Tom Smedinghoff of Baker & McKenzie explains the legal duties – and practical implications – of security breaches, including:

– How often do companies have security breaches these days?
– What are a company’s legal obligations regarding information security?
– Are companies required to disclose security breaches? If so, what types of breaches are discloseable?
– If a company has a duty to disclose a breach, what is the best way to do it?
– What should companies do now to enable them to act quickly if sensitive information is disclosed by another party?