SEC Issues Proposals for Expanded Executive Compensation Disclosure
As expected, the Securities and Exchange Commission (SEC) approved the release of proposals to amend its disclosure requirements with respect to executive compensation. The proposals will affect the disclosure in proxy statements, annual reports, prospectuses and Forms 8-K. The proposed amendments are in response to the growing controversy surrounding what is viewed as excessive executive compensation and the difficulty faced by investors and analysts in determining the total value of an executive’s compensation package. The proposals also are intended to modernize those requirements in the face of new compensation practices. New SEC Chairman Christopher Cox has made this issue one of his early priorities.
The proposals will not apply to the 2006 proxy season, but companies considering early compliance with the requirements should study the proposals in connection with the preparation of their 2006 proxy statements. Comments on the proposals will be due 60 days following the publication of the proposals in the Federal Register, which is expected by the end of this month.
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