22 Jun. 2010 | Comments (0)
- Disclosure of “pay vs. performance” (executive compensation paid vs. performance of company’s stock)
- Disclosure of the amount of and ratio between annual total CEO pay and the median of the annual total compensation of all other employees
- Disclosure whether employees and directors are permitted to hedge declines in employer equity securities
- Requirement that institutional investors disclose their voting practices on certain compensation matters
- Adoption of proxy access rules with some limitations on what the SEC can impose.
- All compensation committee members must be independent (already required by some)
- New SEC rules must define “independence” based on consulting and advisory fees and whether a director is affiliated with a company
- Compensation committees would be authorized to hire and oversee independent compensation consultants and legal counsel (similar to auditor/audit committee model)
- All public companies would have to impose clawback rules for all current and former executives when a material restatement is made.
- Independent Compensation Committees: Standards for listing on an exchange will require that compensation committees include only independent directors and have authority to hire compensation consultants in order to strengthen their independence from the executives they are rewarding or punishing.
- No Compensation for Lies: Requires that public companies set policies to take back executive compensation if it was based on inaccurate financial statements that don’t comply with accounting standards.
- SEC Review: Directs the SEC to clarify disclosures relating to compensation, including requiring companies to provide charts that compare their executive compensation with stock performance over a five-year period.
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About the Author:Gary Larkin
Gary Larkin is a research associate in the corporate leadership department at The Conference Board in New York. His research focuses on corporate governance, including succession planning, board compo…
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