A plan for fuller disclosure on CEO pay and perks

Last week, in fact, New York State Comptroller Alan Hevesi estimated that, despite a lackluster stock market, bonuses on Wall Street hit a record $21.5 billion, up 15.5 percent from the prior year. The average bonus: $125,000.

"This is really good news for the financial services industry," said Mr. Hevesi at a press conference.

Hevesi is also the sole trustee of the New York State pension fund. As such, he says he supports full disclosure of executive compensation. "We look to the SEC to take the lead," he said last week.

But the SEC is not the only force pressing for change in revealing CEO compensation. "The shareholders have been wanting to have these rules overhauled for a long time," says Diane Doubleday, San Francisco-based principal of Mercer Human Resource Consulting. "They have been able to garner the attention of the SEC and get these rules reissued."

In fairness to the companies, she points out, corporate compensation and benefit practices have become more complex since 1992, the date of the last SEC overhaul. "Not all the practices today fit tidily into a tally sheet."

However, corporate watchdogs, including consultants who advise institutional investors, have been pressing for change. One of those is proxy consultant Institutional Shareholder Services (ISS), which issues recommendations to 1,600 institutional clients. One of its goals for some time has been comprehensive "tally sheets" of CEO pay. In a press release last fall, ISS said it plans to recommend "withhold votes" on some directors of companies with "poor pay practices."

Jesse Fried, a law professor at University of California at Berkeley, says it hasn't always been easy for investors to weed through the proxy statement to find how much an executive makes. "Everything is there somewhere, but you must be very sophisticated and spend a lot of time to get to it," he says. "What has happened is, since 1992, firms have paid compensation in forms that don't need to be included in the summary tables, such as post- retirement compensation," says Mr. Fried, co-author of the book "Pay Without Performance."

Some of the new SEC changes could be enacted as early as this proxy statement, says Ms. Doubleday: "We may see a number of companies try to restructure their disclosures to reflect the spirit of the SEC proposals."

But most of the changes will come the following year, when some experts think the compensation numbers could be very high. It could encompass retirement benefits, including such perks as use of the company jet. Predicts Ellig: Executive retirement packages will be the next target for shareholders.

Page: 1 | 2