A plan for fuller disclosure on CEO pay and perks

The details first came out in the newspapers, not in corporate reports:

• Don Tyson, Tyson Foods' former chairman, got the firm to pay for items such as a $20,000 Oriental carpet and an $8,000 horse.

• Jack Welch of General Electric had a retirement package that gave him use of the company jet and fresh flowers for his New York apartment.

• Ronald Allen, Delta Airlines' former chair, had a consulting deal that paid him $500,000 a year - even if he weren't alive.

Such revelations of CEO compensation - a few among dozens of similar examples - have helped spur a drive to make corporate pay more transparent. When the Securities and Exchange Commission (SEC) announces its proposal Tuesday, it is expected to require companies to provide more details about how they pay top honchos, including pumped-up pensions and weekend family picnics on Nantucket via the company jet.

As a result, shareholders, watchdog groups, and publications such as Business Week should find it easier to tabulate a CEO's total compensation. And companies may also now have to give more details about what departing executives, such as Mr. Allen, will make once they leave.

"As more and more staggering surprises on the amount of benefits not disclosed have come out in the news, the SEC has gotten some momentum to work on this," says Anne Plimpton, a lawyer at McDemott Will & Emery in Boston and an expert on executive compensation.

Disclosure is likely to exacerbate the debate over CEO compensation. When companies release their proxy statements each spring, business publications begin tabulating how much their executives make. Some corner-office occupants scan their competitors' reports in hopes of making the case for higher pay. It's also the season when shareholder activists call for restraint, noting the huge gulf between the average worker and the boss.

"It flares up every year," says Bruce Ellig, author of "The Complete Guide to Executive Compensation." "The expected SEC changes in executive-pay disclosure will take the excessive executive-pay issue to new heights."

In 2005, corporate earnings for the Standard & Poor's 500 stocks are estimated to have risen 13 percent, down from about a 15 percent gain in 2004. For that year, Business Week estimated that the CEOs at the largest companies made $3.5 billion in salaries, bonuses, and long-term compensation. (Actual 2005 earnings and compensation data aren't available yet.)

While executive compensation last year may not be a record when adjusted for inflation and compared with the dotcom boom, it's also likely to be pretty good. "I would say it's about the same as 2004 and maybe a little less," says Mr. Ellig. "It depends on the industry. For example, investment bankers will be high."

Page: 1 | 2