SEC Disclosure Reforms Get Praise, and Potshots

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SEC Disclosure Reforms Get Praise, and Potshots
Support for proxy access,                     he didn’t expect major legislative reforms             the Compensation Discussion & Analy-
skepticism on success                         to come to a vote until next spring.
                                                 Some commenters on the SEC pro-
                                                                                                     sis “appear to many practitioners as not
                                                                                                     providing enough specific guidance to
of better risk-reward                         posals, including Hye-Won Choi, head
                                              of corporate governance at TIAA-CREF,
                                                                                                     be meaningful,” resulting in “great risk
                                                                                                     that most companies’ disclosures will
analysis, disclosure                          support them overall but cautioned that                fail to address specific, important action
                                              the SEC will need to take more steps to                items.”
                                              discourage companies from filing boil-                     As proposed, a company would be re-
By Melissa Klein Aguilar                      erplate disclosure language. To that end,              quired to discuss and analyze its “broader
                                              Choi suggested that the SEC “reaffirm                  compensation policies and overall actual

T    he Securities and Exchange Com-
     mission has received a flood of sug-
gestions, complaints, praise, and other
                                              the need for disclosure to be clear, con-
                                              cise, customized to the company, and ac-
                                              cessible to all shareholders.”
                                                                                                     compensation practices for employees
                                                                                                     generally, including non-executive offi-
                                                                                                     cers, if risks arising from those compen-
comments for its sweeping plans to re-           SEC Chairman Mary Schapiro her-                     sation policies or practices may have a
vamp corporate proxy disclosures.             self touched on that issue in remarks she              material effect on the company.”
   The comment period for its proposals       made July 1 at an SEC meeting where the                    Of all the measures under consider-
ended mid-September, and the 137-page         commissioners voted to publish the pro-                ation, says John Farrell, KPMG’s lead
proposing release drew scores of re-          posals. She stressed the concept of “bet-              partner for enterprise risk management,
sponses to the many questions the Com-        ter or more timely disclosure, not simply              “That’s the one that’s really front and
mission had asked. Not surprisingly, re-      additional disclosure.”                                center” for issuers.
sponses varied as widely as the questions                                                                Farrell says that for companies to de-
themselves.                                   Compensation Risks                                     scribe how their compensation policies
   The proposing release covers a wide
swath of issues, mostly dwelling on great-
er disclosure of risks, executive compen-
                                              T    he main thrust of the proposals is to
                                                   shine a spotlight on risk oversight,
                                              particularly how companies monitor the
                                                                                                     affect risk taking, they will need to in-
                                                                                                     ventory their policies around the globe
                                                                                                     relative to their risk profiles—and that’s
sation, or risks stemming from executive      risks of excessive compensation. But Jes-              something most companies haven’t been
compensation. The proposals also call for     se Brill, chairman of the National Asso-               doing. Particularly outside of the fi-
more disclosure of director nominees’         ciation of Stock Plan Professionals, said
experience; disclosure of whether com-
				
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