March 27, 2006

Do You Believe in Miracles?

Ever cry at a basketball game? Or make love to 20,000? Took my boys yesterday to see the basketball miracle of the century as my George Mason Patriots beat the prohibitive favorite to win the national championship, UConn.

For those that don’t follow basketball, George Mason was the last team to receive a bid into the tournament and many believed that they were not worthy of getting in at all. Against all odds, they have beaten three former national champs to earn a place in the Final Four. Boy, the place was rocking at Verizon Center; scared my 8-year old plenty… george mason.jpg

Practical Considerations: Implementing a Majority Vote Standard

Tomorrow’s webcast – “Practical Considerations: Implementing a Majority Vote Standard” – will focus on the practical considerations and consequences of implementing a majority vote standard or director resignation guideline and will include these experts:

Keith Bishop, Partner, Buchalter Nemer LLP
Joshua Cammaker, Partner, Wachtell, Lipton, Rosen & Katz LLP
Peggy Foran, SVP-Corporate Governance, Assc. General Counsel & Secretary, Pfizer Inc.
David Katz, Partner, Wachtell, Lipton, Rosen & Katz LLP
Cary Klafter, VP-Legal & Govt. Affairs; Director of Corporate Affairs & Secretary, Intel Corporation
Charles Nathan, Partner, Latham & Watkins LLP
Stephanie Schaeffer, Vice President, Chief Legal Officer, Paychex, Inc.
Thomas Welch, Jr., Vice President – Legal, General Corporate Counsel, Dell Inc.
Honorable Norman Veasey, Partner, Weil, Gotshal & Manges LLP

With Alaska Air Group, Altera and Safeway being the latest to join the ranks of those adopting pure majority vote standards – as noted by ISS on Friday – this is a program you don’t want to miss!

The Latest Proxy Compensation Disclosures

In his “Proxy Disclosure Blog” on, Mark Borges continues to blog daily on the latest compensation disclosures as proxy statement are being filed. Here are two of his latest entries:

Comcast Execs Pay Their Own Way

My recent posts on perquisites don’t necessarily tell the entire story of what’s going on in this area. Take, for example, the Comcast proxy statement. While a footnote to the Summary Compensation Table notes the amounts that each named executive officer received as perquisites and to cover tax liabilities, it also discloses that, pursuant to a company policy regarding management perquisites, the NEOs paid the company certain amounts for items that otherwise would have been personal benefits.

The Board Compensation Committee Report sets out the company’s perquisites policy:

“Comcast’s policy on the provision of executive perquisites with respect to Messrs. Brian L. Roberts, Ralph J. Roberts and Burke is to allow each of them to receive perquisites up to a maximum taxable value of $50,000. If the executive receives benefits that would otherwise be considered perquisites in excess of this amount (generally calculated based on the associated tax value), he is required to pay Comcast the amount of such excess. With respect to the other named executive officers, they are generally required to pay Comcast for the full taxable value of any benefits that would be considered perquisites, other than the provision of parking at Comcast’s headquarters.

In addition, Comcast pays, or reimburses, premiums on life and executive long-term disability insurance policies for all named executive officers who participate in these plans and provides a tax gross-up with respect to certain of these payments.”

It appears that the policy has been in place for a few years, so it isn’t a response to the SEC proposals. It also appears that the policy calls for the NEOs to reimburse the company based on the tax value of the benefit, with the company disclosing the incremental difference between that amount and its cost in the SCT. That’s why, in spite of the policy, some perk amounts wind up in the table. Thanks to Ron Mueller for pointing out this disclosure.

Bank of America’s Proxy Statement

Bank of America’s recent proxy statement filing follows the recent trend of incorporating elements of the SEC proposals into the executive compensation disclosure. Here are some of the highlights:

Director Compensation

BofA begins with a description of its standard fees arrangements and then provides a table showing the amounts received by each director. The table starts with a total compensation column and then lists various cash and stock fees and retainers. This information is followed by a description of changes to the company’s director compensation program that go into effect in 2006. There is also a discussion of stock ownership guidelines for directors and a description of a retirement arrangements with one of the directors.

Summary Compensation Table

Like the director table, the Summary Compensation Table includes a Total Compensation column. The Other Annual Compensation column is supplemented by a perquisites table (which itemizes each perquisite without regard to the minimum disclosure threshold) and the All Other Compensation column includes pension accrual amounts. For the majority of the named executive officers, these pension accruals reflect the amount of compensation credits under the company’s qualified and non-qualified pension plans with respect to plan-eligible compensation paid each year.

Pension Benefits

BofA provides summary descriptions of its multiple pension plans – two tax-qualified plans (including one for former employees of Fleet Bank) as well as various pension restoration plans and supplemental executive retirement plans. These descriptions are followed by a simple table setting forth the years of service and estimated annual benefits for each NEO.


These enhancements typify what I’m seeing in 2006 proxy disclosure. While some companies are making subtle refinements to their board compensation committee reports, most efforts appear to be devoted to improving tabular disclosure, both through the use of a Total Compensation column and perquisite and director pay tables. This makes sense, as these modifications are relatively easy to make, don’t involve difficult interpretive issues, and are consistent with next year’s disclosure regime.