October 6, 2010

The Boston Globe’s Scoop: Many Companies Can’t Do the Executive Pay Math

On Monday, the Boston Globe ran this breathless story at the top of page one. I went into it expecting an analysis about the judgment calls we all make in drafting compensation disclosure and thought there might be journalistic oversimplification as typically happens in the mass media. Some might say that pay disclosure is not necessarily a science, but an art.

However, one has to concede that math is still a science – and the Globe’s research certainly raises eyebrows about how seriously some companies are taking their pay disclosures. The Globe looked at about 210 local company proxy statements, adding up the columns in the summary compensation tables. It turns out that 55 times – at 34 companies – the totals of the columns did not match the number the company reported in the “Total” column. Um, that’s over 15%.

At most of these companies, the Globe determined (or the company conceded) that it was some sort of math or clerical error – transposed numbers, extra digits, etc. In some cases, when the company updated the stock compensation numbers for the past years using the SEC’s new methodology, they just changed the column in the middle of the table but didn’t update the total. Truly, the devil is always in the details and I would urge companies to double-check their numbers this year as I imagine a lot of newspapers are going to be following the Globe’s lead and do the math themselves in their local areas. Thanks to Mike Andresino of Posternak for bringing the article to my attention!

Our Timely Ten Tips: Preparing Say-on-Pay Disclosure Now

We have just posted the Fall 2010 issue of the Compensation Standards newsletter, in which Mark Borges provides ten timely tips for preparing say-on-pay disclosure. Note that we are making a big change for for 2011 – we are moving the online version of “Lynn, Borges & Romanek’s Executive Compensation Disclosure Treatise & Reporting Guide” onto that site. So that when you try a no-risk trial or renew for 2011 – remember that all memberships expire at the end of the year – you gain immediate access to it. The 2011 version of the Treatise will be posted within the next few weeks; the 2010 version is posted now.

Poll: How to Handle Rating Agency Communications After Reg FD Repeal?

On Monday, the SEC’s recent Regulation FD adopting release was published in the Federal Register – so October 4th is the effective date for the removal of the rating agency exemption that I blogged about last week.

In that blog, I noted that companies may want to pursue stand-alone confidentiality agreements with the agencies. Now I’m hearing from some companies that they have approached a few agencies and have heard pushback from them about entering into stand-alone agreements. Rather, I hear these agencies believe that companies can rely upon the internal confidentiality policies that the agencies already have. Here is a poll on what your company intends to do:

Online Surveys & Market Research

– Broc Romanek