US exec pay remains a mystery

Many US companies are still not adequately explaining how they set senior
executive pay despite increased disclosure rules introduced in 2006 it has

An analysis carried out by the US Securities & Exchange Commission
revealed that a meaningful analysis of how and why a company evaluated an
executive’s remuneration package was ‘all too often’ missing, reports the

Christopher Cox, SEC chairman, said investors ‘should not need a machete and
a pith helmet to go hunting for what the CEO makes’.

The reaction to the rules will been seen as a test for the SEC’s use of
principles-based disclosures.

The SEC’s analysis revealed there was a lack of explanation of performance
targets, pay benchmarks, differences in compensation policies, decisions among
executive officers and change-in-control arrangements.

John White, the SEC’s director of corporate finance, told the FT: ‘There’s a
lot of strict factual information but there is little analysis about the how and
the why, and of why particular philosophies, processes and performance targets
were used.’

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