Better Disclosure of Exec Pay Is Urged

Securities and Exchange Commission Chairman Christopher Cox said investors should have better access to data on executive pay packages so they could make comparisons among companies.

“I think you can look in the near future to the SEC for some improved rules on disclosure to make sure that, for example, shareholders can have one number, that the different kinds of executive compensation add up to a number that’s comparable executive to executive and company to company,” Cox said Wednesday in an interview with the Public Broadcasting Service’s “Nightly Business Report.”

Investors need such information “in a timely way, before rather than after the fact,” so that they can discipline corporate boards that grant compensation packages they view as excessive, Cox said.

Executive compensation was a priority of former Chairman William H. Donaldson, who said in February that the SEC might force corporate directors to explain how they award pay packages, “so you don’t have to be Sherlock Holmes or [an accountant] to see what the full payments are.” The commission didn’t act on rules before Donaldson left the agency June 30.

The SEC’s drive to revamp executive compensation disclosure was sparked by the uproar that ensued after the agency pressured the New York Stock Exchange into reporting then-Chairman Richard Grasso’s $190-million payout. Grasso resigned in 2003.

In a case that put a spotlight on executive compensation, a judge in Delaware ruled Tuesday that Walt Disney Co. directors had properly overseen the ouster of President Michael Ovitz in 1996 and didn’t have to reimburse the company for his $130-million severance package.

The Disney directors’ conduct at times “fell significantly short of the best practices of ideal corporate governance,” wrote Delaware Chancery Court Judge William B. Chandler III. The law, though, “cannot hold fiduciaries liable for a failure to comply with the aspirational ideal of best practices.”

Cox, widely considered a friend of business during his 16 years as a California congressman, said during his Senate confirmation process that he would try to build on, not reverse, Donaldson’s record of imposing numerous new regulations on public companies.