On Friday, the SEC announced that it would host a roundtable on executive compensation disclosure requirements on June 26th with investor and public company representatives (and others) as part of the process “to ensure that they continue to be cost-effective and result in disclosure of material information without an overload of immaterial information” as noted in this statement from SEC Chair Paul Atkins. The public is invited to submit comments in advance of the roundtable.
Paul’s statements included 9 lengthy questions to consider that I have streamlined into shorter bulleted questions so that you can learn their essence at a glance:
- How are executive pay packages developed, and what roles do management, the board, and advisors play?
- How can disclosure rules better inform investors about how executive pay decisions are made?
- What compensation details are material for investors, and how does investor engagement shape pay and disclosure?
- Have the 2006 compensation disclosure rules achieved their goals, and how could they be simplified for clarity and investor use?
- What disclosures are most useful for investors’ say-on-pay votes, and are the rules cost-effective for companies?
- How can we streamline executive pay disclosures to reduce cost and complexity while keeping them investor-relevant?
- What lessons have emerged from implementing pay-versus-performance and clawback rules, and where could improvements be made?
- What challenges exist in calculating and using “compensation actually paid” under the pay-versus-performance rules?
- How have companies navigated perquisite disclosure rules, and how do these affect perk decisions and investor analysis?
I can’t help but tell my own story about my small role relating to how the SEC’s 2006 massive overhaul to the pay disclosure rules came about:
1. When I first joined TheCorporateCounsel.net in 2003, the owner – Jesse Brill – told me he wanted to hold a conference about responsible executive pay. I put him off for a year as I got my feet wet since I had never hosted a conference before.
2. In May and September of 2004, Jesse and I penned a pair of special editions of “The Corporate Counsel” newsletter (that we posted for free) in which we outlined two dozen things that needed to be reformed in the executive pay area. At the time, the SEC’s disclosure requirements made little sense. For example, there was no requirement to disclose the total amount of pay for the CEO. Meanwhile, I put together an “Executive Compensation Task Force” consisting of 80 of the top compensation lawyers and consultants.
3. In October 2004, we held our first “Executive Compensation Conference” and then-Corp Fin Director Alan Beller delivered the only speech of his SEC career at it, in which he gave a harbinger of the ’06 executive pay disclosure reform – including uttering the memorable “all means all” line.
4. I launched CompensationStandards.com at that time as a way to post the voluminous materials for that first conference. In fact, the site’s original name was “CompensationStandardsConference.com.” After the conference, we decided to turn the site into a permanent subscription-based site. I looked on the WayBack Machine at an early version of the site and I forgot that I used to run “Pro or Troll?” quizzes on the site.
5. When the SEC adopted its new pay rules in 2006, we held a huge conference in Washington DC about them and afterwards, we decided to continue that conference and it became the “Proxy Disclosure Conference” that still exists today…
Authored by
Broc Romanek