According to a
by the US Securities and Exchange Commission (SEC),
the proposed rules would cover proxy statements, annual
reports, registration statements and the commission Form
8-K. Companies would be required to detail compensation
arrangements through refined data tables and improved
text section of the complete compensation packages
SEC Chairman Christopher Cox stressed that the
proposal is about "wage clarity, not wage controls,"
saying that stepped up disclosure mandates should help
investors get a better idea of what companies are paying
their executives, the Wall Street Journal reported.
Members of the public can now submit comments on the
proposal to the commission.
While the SEC is not tackling CEO pay itself, SEC
Commissioner Roel Campos, a Democrat, said if the
proposal is put in place, succinct tables would provide
"one-stop shopping" for investors who want to quickly
figure out what CEOs really earn, according to the
Journal. "Shareholders will have no one to blame but
themselves if executive pay continues to rocket upward,".
According to the SEC, the rules would require a
compensation discussion and analysis section dealing
with the objectives and implementation of executive
compensation programs. The section would focus on the
most important factors underlying each company's
compensation policies and decisions.
The rules called for executive compensation
disclosure to be organized into three broad
compensation over the last three years
holdings of outstanding equity-related interests
received as compensation that are the source of future
gains - A dollar value will be shown for all
stock-based awards, including stock and stock options,
measured at grant date fair value, computed pursuant to
Financial Accounting Standards Board's Statement of
Financial Accounting Standards No. 123,
to provide a more complete picture of
compensation and facilitate reporting total
Retirement plans and other post-employment
payments and benefits - the Retirement Plan
Potential Annual Payments and Benefits Table, which
would disclose annual benefits payable to each named
executive officer;the Nonqualified Defined
Contribution and Other Deferred Compensation Plans
Table, which would disclose year-end balance, and
executive contributions, company contributions,
earnings and withdrawals for the year; and disclosure
of payments and benefits (including perquisites)
payable on termination or change in control,
including quantification of these potential payments
Also, after several highly publicized examples of
executives receiving numerous non-monetary perks, the
rules mandate that the threshold for disclosing such
perks would be reduced to $10,000, the commission said.
Interpretive guidance is provided for determining what is
a prerequisite. The threshold is now $50,000.
A statement by Cox is