Amid the ongoing furor about executive pay, the Securities and Exchange Commission (SEC) recently proposed changes to what companies must disclose about top officers' pay. The changes, expected to take effect in 2010 proxies, include a consideration of risks involved in pay plans.

In the proxy report's compensation discussion and analysis, the SEC wants companies to look at whether compensation policies create incentives for employees that could add to risks. "Certainly the principle of doing a compensation risk assessment makes a lot of sense," says Don Nemerov, an executive director in Grant Thornton's compensation and benefits consulting practice. But he questions how far the requirement extends. "We need some more definition and boundaries," Nemerov says, suggesting that otherwise, "all the sudden, we'll have every compensation plan for the company in the proxy."

The SEC is also asking companies whose compensation consultants provide advice on other benefits to disclose their payments to the consultants. And the agency wants to revise the way companies report the stock and options they grant to executives so the full value is disclosed in the year the grant is awarded.

Continue Reading for Free

Register and gain access to:

  • Thought leadership on regulatory changes, economic trends, corporate success stories, and tactical solutions for treasurers, CFOs, risk managers, controllers, and other finance professionals
  • Informative weekly newsletter featuring news, analysis, real-world case studies, and other critical content
  • Educational webcasts, white papers, and ebooks from industry thought leaders
  • Critical coverage of the employee benefits and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.