SEC To Scrutinize Executive-Compensation Disclosures

SEC To Scrutinize Executive-Compensation Disclosures

SEC To Scrutinize Executive-Compensation Disclosures

By Fawn Johnson, Of DOW JONES NEWSWIRES

SAN DIEGO -(Dow Jones)- The Securities and Exchange Commission will be on the lookout for clear analysis from companies in this year's proxy statements about how their board directors and senior executives are compensated, including the use of performance targets, a senior SEC staffer said Friday.
"We are looking for analysis of [companies'] compensation decision," said Shelley Parratt, deputy director of the SEC's division of cor
porate finance. "We continue to find that companies are explaining in exhausting detail the framework in which they made their compensation decisions rather than explaining the decisions themselves."

She added, at a securities law conference sponsored by Northwestern Law: " Remember that your disclosure should tell your story and the story is not complete without the analysis."

Parratt's comments come on the heels of new rules approved last month by the SEC requiring public companies to disclose how compensation policies incentivize risk-taking.
The compensation-disclosure rules require public companies to discuss information about the relationship between overall compensation policies and risk and how risks are managed.

SEC's rules on compensation and corporate-governance matters come at a time when some financial firms that received rescue funds from the government have faced public wrath for paying high salaries and bonuses to employees.
The House Financial Services Committee on Friday heard testimony from professors encouraging policymakers to rein in risk-taking compensation policies for Wall Street executives. Lawmakers also are mulling legislation that would give shareholders a "say on pay" referendum to executive compensation.

But for now, oversight of corporate boards and executive compensation is likely to fall to regulators like the SEC. Congress continues to struggle with broader financial-overhaul questions of economic systemic risk and consumer financial protection, and it is unclear whether final legislation will be enacted this year.
Parratt encouraged companies to disclose performance targets that are set for board directors regardless of whether those benchmarks were met or even ignored by the compensation committees.

"In the absence of disclosure about targets, we question whether shareholders have a complete picture with which they can judge whether the board is acting in their best interest," Parratt said.

-By Fawn Johnson, Dow Jones Newswires; 202-862-9263; fawn.johnson@ dowjones.com (END) Dow Jones Newswires
01-22-101333ET
Copyright (c) 2010 Dow Jones & Company, Inc.

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http://dreamlearndobecome.blogspot.com This posting was made my Jim Jacobs, President & CEO of Jacobs Executive Advisors. Jim also serves as Leader of Jacobs Advisors' Insurance Practice.