January 3, 2007

Compensation Standards – The New Quarterly Newsletter for Directors

As we know that executive compensation is foremost on director’s minds these days, we have posted the Winter 2007 issue of our new practical print newsletter for you to read and share with your directors about executive compensation practices – at no charge!

The new newsletter – Compensation Standards – will help keep directors abreast of the latest executive compensation practices and to help them glean practical pointers that can assist them in performing their challenging duties. Try a no-risk trial to Compensation Standards today. You have our permission to forward as many copies of the Winter 2007 issue as you like to directors and CEOs and others that might benefit from it.

The SEC’s December Executive Compensation Rule Changes: Help is on the Way!

To help all those trying to sort out the SEC’s surprise December amendments to its executive compensation rules, we just announced a new Part 1 of our January Web Conference to address how you should implement the amendments in a webcast to be held next Thursday, January 11th: “The SEC’s December Rule Changes: How They Impact You.” [And if you can’t wait til next Thursday for guidance, Mark Borges already has blogged four different times providing analysis on the amendments in his “Proxy Disclosure” Blog.]

And then, following up where our September two-day executive compensation disclosure conference left off, catch the rest of our critical 2-Part Web Conference on Thursday, January 18th – “The Latest Developments: Your Upcoming Proxy Disclosures—What You Need to Do Now!“- which will provide you with all the latest guidance about how to overhaul your upcoming disclosures in response to the SEC’s most recent positions on the new executive compensation rules as well as the latest thinking on how to face the most difficult issues, such as how to deal with airplane and other perks and what to include in the CD&A.

Because this essential 2-Part Web Conference will be accessible only to those that are 2007 members of, we urge those of you who have not yet renewed for 2007 to do so now (all memberships expired at year end; grace period for non-renewers ends this Friday) – and anyone not a member should try a no-risk trial. If you need to renew, please renew online if you can as our HQ is overwhelmed right now.

Floyd Norris: A Little More on the SEC’s Forgetful Chairman

The NY Times columnist, Floyd Norris, has really been going after the SEC for adopting changes to its executive compensation rules so soon before the proxy season and without asking for public comment. In addition to a couple of scathing columns, Floyd has posted additional thoughts on his blog, including this one (he has others, including this one):

“My column today points out that the staff of the Securities and Exchange Commission knew — and told the public — things that Christopher Cox, the commission chairman, now says were unknown to him. It also points out that those things were discussed in January by him at the S.E.C. public meeting when the rules were proposed. The column has links to documents, but may make readers work too hard to find them. The explanatory documents, which the S.E.C. put out in August, a month after the commission voted, can be reached here. The relevant part is on pages 56 to 58.

The January conversation can be linked to here. A reader then has to go to the Jan. 17 meeting, and watch a video. The important part starts at about 24 minutes and 50 seconds into the video, when Mr. Cox engages in a conversation with Alan Beller, who was then the director of the commission’s division of corporation finance.

‘If I might turn next to stock options,’ Mr. Cox stated, ‘the proposal today would require the disclosure of the fair value of stock option awards as of the date that the option is granted to an executive officer. That distinguishes it in some respects from the reporting otherwise for financial reporting purposes.’ This point is the one that Mr. Cox now says he did not know was in the rule when the commission approved it in July. The commision changed the rule just before Christmas.

Mr. Cox told me tonight that he had remembered the January conversation, and that I misunderstood him if I thought he had not. But he repeated that he wrongly believed that section had been changed by July, and blamed the error on miscommunication amid staff changes at the commission. In January, Mr. Beller said the S.E.C. had tried timing conformity in the past, only to reject it because it was viewed as less informative and ‘excessively confusing.’ That is not a bad description of the rule the commission came up with in December.”