Congratulations, we made it out of 2009! That’s the good news. The bad news is that 2009 means a whole lot for 2010. I previously wrote about the key new SEC regulations impacting executive compensation disclosure. In our Executive Compensation Trends newsletter, we highlight a new report called Preparing for Proxy Season: The New SEC Regulations. This new report pulls together summaries of the key topics, along with plenty of disclosure examples that should help everyone get an early jump on their proxy preparations.
Some of the highlighted topics and findings include:
- Relationship between Compensation and Risk: Companies are now required to provide more detailed information of existing compensation policies – including those of non-executive officers – if these policies pose a financial risk to the company. Based on an analysis of S&P 1500 companies, 235 companies disclosed the phrase “excessive risk” in their CD&A for 2009, compared to only two companies in 2008.
- Board of Director Risk Management: The new regulations call for additional disclosure about the board’s role in the company’s risk management process. At present, many companies mention the board and its relation to risk management within their proxy filings, but do not typically provide specific information on how the board, or its committees, manages risk.
- Company Leadership Structure: Under the new rules, companies are required to disclose whether they have chosen to combine or separate the principal executive officer and board chair positions, and why. An analysis of 1,251 S&P 1500 companies updated for fiscal years ending between April 2008 and March 2009 indicates 56% of companies have a CEO-Chair, of which 59.9% have a lead director.
- Say on Pay: Although not a topic covered in the new SEC regulations, we are seeing a growing trend in say-on-pay practices, partly as a result of regulations stipulated by the Troubled Asset Recovery Program (TARP). In 2009, there were over 300 votes relating to say-on-pay. This number includes adoptions of a vote on executive compensation policies, shareholder proposals requesting adoption of such policies, and actual votes on a company’s pay practices.
The complete report is provided to all Equilar Knowledge Center subscribers. Non-subscribers can request a copy of the report by visiting the Executive Compensation Reports section of our website.Tags: disclosure requirements, Executive Compensation, proxy, sec regulations, sec rules