February 24, 2006
Latest on New SEC Rules on Executive Compensation
As we pour though the 300 pages of new rules on the disclosure of executive compensation we continue to learn. Boards are starting to give executive pay based on performance targets, a welcome development. But under the 300 pages of rules, shareholders are not told what the performance targets are. The SEC apparently has accepted the argument that the target are sensitive, confidential business information. Under normal circumstances the argument has merit; in light of the the gross lack of control over executive compensation exhibited in the last ten years by corporate boards, the argument should have been rejected in light of the need for transparency over compensation packages.
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