Blogging Employee Benefits

January 29, 2006

SEC Exec Comp Regs – Named Executive Officers

Filed under: Executive Compensation, Regulations, SEC — Fuguerre @ 9:27 am

Still only on my second, more in-depth reading through the 370 pages of the SEC’s proposed regulations on executive compensation disclosures released this past Friday. [File No. S7-03-06] I’m feeling somewhat lonely: so far I’ve not yet seen another word out there on the actual proposed reg text, not from any of the business press nor from any of the blogs I read nor from any other commentator, nothing yet beyond what we had known from the Commission meeting earlier in the month, that and some early rumors on the exceptions that were expected to be extended to foreign issuers. Ah well, at least the solitude gives me more time to be plodding through the proposed regs, at least for now. I’m sure by tomorrow, when I’m expecting the text to emerge through the Federal Register, I’ll have more than enough external traffic to be digesting on this.

OK, a few more notes on pieces I’ll need to be dealing with in my corner of the exec comp room: named executive officers for whom the new compensation disclosures will be required. [Prop. 229.402(a)(3)] For most filers, the count won’t increase, but the particular executives might. There are to be at least 5 –

  • Principal Executive Officer – Regardless of compensation level. All individuals serving in the PEO capacity during the final fiscal year shown in the compensation disclosure would be included, even if not serving in that capacity as of the end of the last fiscal year.
  • Principal Financial Officer – Regardless of compensation level. And similar to the PEO rule, all individuals serving in the PFO capacity during the final fiscal year shown in the compensation disclosure would be included, even if not serving in that capacity as of the end of the last fiscal year. Under the proposed rules, the PFO would be a named executive officer even if not the highest paid officers in the company, in contrast with the current rules that look to the PEO and the 4 highest paid other officers.
  • Next 3 Highest Paid – Ranked on the basis of the total compensation to be disclosed under the new rules, the highest paid 3 individuals serving as officers as of the end of the last fiscal year, other than those identified under the PEO or PFO rules. Disclosure will be required for up to 2 additional individuals who would have been included in this subset but for the fact that they were not serving as officers as of the end of the last fiscal year. Disclosure is not required for any officer (other than the PEO or PFO) whose total compensation does not exceed $100,000.

It may also be necessary to include as a named executive officer one or more executive officers of subsidiaries of the company. Conversely, it may be appropriate to exclude an individual (other than the PEO or PFO) whose compensation includes cash payments relating to overseas assignments.

For small business issuers, named executive officers will be limited to the CEO and the 2 highest paid other officers. [Prop. 228.402(a)(2)]

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3 Comments »

  1. […] BeneBlog A Pension & Benefits Weblog courtesy of WordPress.com « SEC Exec Comp Regs – Named Executive Officers […]

    Pingback by BeneBlog » Blog Archive » SEC Proposed Exec Comp Disclosures - Pension Plans and Other Post-Employment Compensation — January 29, 2006 @ 11:06 pm

  2. In addition to the detailed compensation disclosures for the named executive officers, for up to 3 employees who are not officers during the last fiscal year for which disclosures are made, but for whom the total compensation exceeded that of any of the named executive officers, disclosures are to include the job position of the individual and the total compensation for that individual for the most recent fiscal year. See Prop. 229.402(f)(2).

    Comment by Fuguerre — January 31, 2006 @ 8:19 am

  3. […] During the phase-in period, significant disjunctures may occur in the Summary Compensation Table between the compensation amounts under the old rules versus those under the new rules, adversely affecting comparability of the year-to-year numbers during those early years. For example, if a named executive officer participates under one or more defined benefit pension plans, then the total compensation numbers under the old rules exclude those benefits entirely, whereas the total compensation numbers under the new rules include the increase in the actuarial value of those benefits, as described in my previous post here. Although the new disclosure rules do not explicitly require discussion of the transition or phase-in, conceivably the effect of the change to the new rules may be a material factor that should be included in the required narrative discussion accompanying the compensation table. […]

    Pingback by BeneBlog » Blog Archive » SEC Proposed Exec Comp Disclosures - Transition — January 31, 2006 @ 4:44 pm


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