SEC, Corporate Governance, and Executive Compensation

The Securitis and Exchange Commission voted to propose two new rules relating to Executive Compensation.  Each proposed rule has a 60-day Comment Period following publication in the Federal Register.

1.  Proposed Rule requiring public companies receiving money from the Troubled Asset Relief Program (TARP) to provide a shareholder vote on executive pay in their proxy solicitations.

My Comment:  This is one clear reason why banks are repaying TARP money.  They don't want restrictions or disclosure requirements relating to executive compensation.

2.  Proposed Rule requiring new disclosures of executive compensation at public companies in their proxy statements regarding:

• The relationship of a company’s overall compensation policies to risk.
   
• The qualifications of directors, executive officers and nominees.
   
• Company leadership structure.
   
• Potential conflicts of interests of compensation consultants.

The proposed rule is meant to improve the reporting of annual stock and option awards to company executives and directors as well as to require quicker reporting of election results. The proxy rules would also be amended.

My Comment:  Past efforts by SEC to reduce executive compensation through disclosure have been spectacularly unsuccessful.  Where there's a will to circumvent or obfuscate disclosure rules (and there most certainly is), we have only to wait to be amazed at the inventiveness that will manifest itself.

Link to Press Release:  http://www.sec.gov/news/press/2009/2009-147.htm

(ag) July 8, 2009, in Executive Compensation, Corporate Governance