New Executive Pay Scrutiny

A recent article in The Economist talks about how new SEC rules are bringing executive pay under even more public scrutiny:

In a study of 100 firms that have reported, Mr Hodgson found that the perks given to chief executives, though relatively small, were much higher than those reported last year under the old, less exacting, disclosure rules. On average, the amounts reported in 2006 under the heading “other annual compensation” in 2006 were $192,000—131% higher than in the corresponding category in 2005. One reason for this jump was that the new rules require the disclosure of all perks worth $10,000 or more, whereas the old rules allowed firms to keep quiet about anything worth less than $50,000.

In “The Politics of Pay,” writer David Simmons says that Rep. Barney Frank “is proposing legislation to require companies to seek the (non-binding) approval of shareholders for executive pay packages each year.” As recently as yesterday in my local paper, The Philadelphia Inquirer, there was an article called “Shareholders Ask Say on Executive Pay.” It’s the latest in what seems to be weekly news about increased shareholder activism.