Blogging Employee Benefits

January 17, 2006

SEC Set to Propose New Disclosure Rules for Exec Comp

Filed under: Executive Compensation, SEC — Fuguerre @ 9:13 pm

The Securities Exchange Commission will propose changes to disclosure requirements for executive and director compensation. The new rules will change disclosures for proxy statements, annual reports, and registration statements, as well as Form 8-K reporting of compensation arrangements. [SEC Press Release 2006-10]

The new rules would require additional compensation disclosures to be made for the principal executive officer, the principal financial officer, and the three other officers paid the highest salary plus bonus. SEC discussion focused on the possibility that disclosures may be also be necessary for additional individuals if the salary+bonus ranking did not reasonably represent the company’s compensation practices for the highest paid individuals. Additional disclosures will also be required regarding compensation of the company’s directors.

A new column in a reorganized Summary Compensation Table will report total compensation. A column for “All Other Compensation” will pick up compensation amounts that have not been disclosed elsewhere on the table. The threshold for disclosing perquisites will be reduced to $10,000.  Within that context, the SEC made clear that all components of compensation would be reported on the table.

Stock-based awards are to be measured using the methodology of SFAS 123R.  However, rather than recognize the cost of the awards over the period through vesting, for the compensation disclsoures the full amount of the compensation determined as of the award’s grant date is to be shown.

Disclosures for retirement plans and post-employment benefits are to include the change in actuarial value for all future defined benefit payments to which the executive is entitled.  Disclosure of actuarial assumptions used for the measurement may be required.  For defined contribution plans, the disclosure is to show year-end balances, contributions, and earnings on balances.

The proposed rules will be published in the Federal Register, with a 60-day comment period to follow.

Leave a Comment »

No comments yet.

RSS feed for comments on this post. TrackBack URI

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Blog at

%d bloggers like this: