Preparing for the 2010 Proxy Season and New Executive Compensation SEC Regulations

Jan. 6, 2010 - PRLog -- Equilar, the market leader in executive compensation data and research, published an analysis of the new SEC disclosure regulations and their implications on current practices.

Deriving data from public company filings for fiscal years 2008 and 2009, Preparing for Proxy Season: The New SEC Regulations, offers an overview of the new mandates and a number of key examples of what some companies are doing to comply. Providing a general framework to assist 2010 proxy preparations, some of the highlighted topics and findings include:

Relationship between Compensation and Risk: Companies are now required to provide enhanced dissemination of existing compensation policies – including non-executive officers – if these policies pose financial risk for 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 divulge 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 percent of companies have a CEO Chair, of which 59.9 percent have a lead director.

Consultant Fees and Conflict of Interest: Effective February of this year, most companies will need to increase the level of dissemination of information about their consultant relationships. In a study of consultant disclosure under the old regulations, only approximately 3 percent of companies disclosed any fee information.

Say on Pay: Although not a topic covered in the new SEC regulations, there is 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, including adoption 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 http://www.equilar.com/Executive_Compensation_Reports.php.

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Equilar's award-winning product suite is the gold standard for benchmarking and tracking executive compensation, board compensation, equity grants and award policies and compensation practices. Equilar products and custom research services enable corporations, human capital consulting firms, law firms, investors, individual executives, and the media to accurately compare pay packages across thousands of public companies using SEC and exclusive survey data. Equilar research is cited frequently by Bloomberg, BusinessWeek, Reuters, The New York Times, The Wall Street Journal and other leading media outlets. Equilar (Redwood Shores, CA) was recognized recently as one of the fastest-growing private companies in America by Deloitte, Inc., and the Silicon Valley Business Journal.