May 13, 2008

Senator Clinton’s New Executive Compensation Bill

On his “Proxy Disclosure Blog” on, Mark Borges continues to report on proxy disclosures as well as other items. For example, here is a recent entry from him:

I was doing some research on “Say on Pay” today when I stumbled across a piece of legislation
that was introduced in the US Senate earlier this month that has potential implications for, among other things, executive compensation disclosure.

S. 2866, the “Corporate Executive Compensation Accountability and Transparency Act,” was introduced by Senator Hillary Clinton (D-NY) on April 15th and referred to the Senate Committee on Finance for consideration. The bill aggregates a number of pay-related proposals and ideas that were in the news last year and consolidates them under a single executive compensation heading. Among other things, the bill would:

– Amend Section 409A of the Internal Revenue Code to impose a $1 million cap on the amount of compensation that can be deferred each year

– Amend Section 304 of the Sarbanes-Oxley Act of 2002 (the provision providing that, where a company is required to restate its financial statements as a result of misconduct, the CEO and CFO must reimburse the company for bonus or other incentive or equity-based compensation, or any trading profits, received during the 12-month period following the filing of the financial statements) to extend the 12 month period to 36 months and define what constitutes “misconduct” for purposes of the statute

– Add a provision to the Securities Exchange Act of 1934 mandating that reporting companies give their shareholders an annual advisory vote on their executive compensation programs (a provision that essentially mirrors the bill that passed the House of Representatives in 2007)

– Require the Securities and Exchange Commission to promulgate rules “clarifying and strengthening” the disclosure requirements concerning the compensation paid to compensation consultants and other advisors to the board compensation committee. Further, these rules would be required to (i) prohibit compensation consultants to the compensation committee from performing any other work for the company if its presents a conflict of interest or otherwise compromises the consultant’s independence and (ii) contain an independence standard that would preclude a consultant from working with a compensation committee if it had a noncompensation-related business or financial relationship with the company during the previous 18 months

Finally, in an area that’s close to my heart, the bill directs the SEC to promulgate rules requiring the disclosure of the full grant date fair value of equity awards in the Summary Compensation Table. While this provision wouldn’t require the Commission to scrap its December 2006 interim final rules on the reporting of equity awards, that is essentially what it’s intended to do.

At this point, it’s difficult to know whether Senator Clinton is serious about advancing this bill, or whether it’s just a campaign tactic. (Earlier this month, when the excessive executive compensation issue reared its head on the campaign trail, Senator Obama urged the Senate to take up his Say on Pay bill.) Either way, it’s a strong indication of the type of legislation that may be coming next year when a new Administration is installed in Washington.

Our New “Compensation Consultant’s Blog”: A Baker’s Dozen Now Blogging!

We’re pretty excited that thirteen compensation consultants have agreed to contribute to “The Consultant’s Blog” on If you’re a member of the site, input your email address on the blog to get new entries pushed out to you.

Only One Week Left! Early Bird Discount for Compensation Conferences

You have only one week – until May 20th – to take advantage of the Early Bird Discount to register for our Conferences – “Tackling Your 2009 Compensation Disclosures: The 3rd Annual Proxy Disclosure Conference” & “5th Annual Executive Compensation Conference” – which will take place in New Orleans and via Nationwide Video Webcast on October 21st-22nd. Here are the Conference Agendas.

Like last year’s blockbuster conferences, an archive of the entire video for both conferences will be right there at your desktop to refer to – and refresh your memory – when you are actually grappling with drafting the disclosures or reviewing/approving pay packages. Here are FAQs about the Conferences.

For those choosing to attend by coming to New Orleans, I encourage you to also register for the “16th Annual NASPP Conference,” where over 2000 folks attend 45+ panels. And if you attend the NASPP Conference, you can take advantage of a special reduced rate for the Exec Comp Conferences.

Register by May 20th for Early-Bird Rates: Whether you attend in New Orleans or by video webcast, take advantage of early-bird rates by registering by May 20th. You can register online or use this order form to register by mail/fax.
Note that we have combined both of our popular Conferences – one focusing on proxy disclosures and the other on compensation practices – into one package to simplify registration.

If you have questions or need help registering, please contact our headquarters at or 925.685.5111 (they are on West Coast, open 8 am – 4 pm).

– Broc Romanek