Corporate Governance

Pulled from the pages of The Pomerantz Monitor . . .

By Carolyn Moskowitz

Going forward, every two weeks PomTalk will report on a story that first appeared in our related print publication, The Pomerantz Monitor.

Jim Hodgson recently informed readers of our print sibling about the first anniversary of the SEC?s new disclosure rules. In November 2006, the SEC put into effect new executive compensation disclosure rules, formulated to require public companies to reveal exactly how they compensate their top executives. The new rules require significantly increased disclosure?in plain English?of company programs, plans, and practices for executive pay and of communications among board members and management personnel regarding compensation. In addition, the new rules require CEOs and CFOs to personally attest to the accuracy of these disclosures.

So, as we mark the first anniversary of the new compensation rules? effective date, how are our nation?s public companies faring? Not too well, according to the SEC?s Division of Corporate Finance. In its recently released initial review of 350 public companies, it found that in many cases, when disclosures were clear and understandable, they were not meaningful or responsive to disclosure requirements. Conversely, when the disclosures were responsive in content, that content was obscured by arcane and convoluted terms. The SEC?s staff observations underline that the new rules are intended to enforce companies to explain, in concise and clear language, how and why they arrived at specific executive compensation decisions and policies.

The adoption of the SEC?s new compensation disclosure rules?followed by the Division?s first-year review?signals a compensation disclosure sea change. No longer will a disclosure philosophy that elevates form over substance be tolerated.

Full post as published by PomTalk on November 13, 2007 (boomark / email).