Thanks to CorpLawBlog for the link to this article from the Washington Post which discusses an interview with SEC Chairman William Donaldson who discusses the topic of excessive executive pay and retirement perks–“Donaldson Expects Rule Changes on Executive Pay.” According to the article, Donaldson criticized “both the level of executive pay in the United States and the clarity with which businesses disclose compensation to shareholders, especially the lavish retirement packages that often hide in the small print of SEC filings, if they are disclosed at all.” The article notes that the SEC is considering new disclosure requirements that would require companies to disclose the “true costs of retirement packages and other forms of executive compensation.” Excerpt from the article:
Perhaps foremost among the possible changes would be to require more precise and easier-to-understand disclosure of executive pensions and supplemental executive retirement plans, or SERPs. Experts say companies can hide large SERP payments, in part because they are not required to disclose the yearly increase in value of such plans in compensation tables.In addition, firms generally calculate pension plan payments based on an executive’s years of service. But in many cases, executives are given credit for many more years than they actually were on the job, something it can be hard for shareholders to figure out without wading through fine print or reading executive biographies to determine how long an individual actually has worked at a company.
The article goes on to say that Donaldson also “complained that big retirement payouts generally are unrelated to performance measures, meaning retired executives usually are entitled to every penny even if their companies performed poorly or collapsed after they left due to decisions they made on the job.”
SEC spokesman Matthew Well is quoted as saying that it is too soon to speculate about what the new disclosure rules might entail and that the new rules probably wont’ be in place until sometime next year at the earliest.
CorpLawBlog has some additional links here on the topic of corporate governance.