WASHINGTON, March 8 (Reuters) - Executive compensation disclosures, recently expanded under new regulations, are in some cases suffering from “overlawyering” and need to be written in plain English, the chairman of the U.S. Securities and Exchange Commission said on Thursday.
Speaking at the Corporate Counsel Institute’s annual symposium, Christopher Cox said that some explanations of executive compensation in companies’ proxy statements are running more than 40 pages, yet not telling investors enough about how the bosses are being paid.
“This slavish adherence to boilerplate disclosure is what we’re trying to stamp out,” Cox said.
Cox encouraged the lawyer-dominated audience to “plainly tell the executive compensation story.”
He also said the SEC will be electronically tagging the executive compensation data released in proxy statements.
The agency will then put an interactive data link on the Internet around June, which will allow the public to compare compensation data for several hundred of the largest companies.
“Investors have a right to this information,” Cox said.
Under the SEC’s new pay disclosure rule, companies must include in their annual proxies a single number that combines salary, bonus, perks and other compensation awarded to each top executive in a given year.
Companies have also been expanding their explanation of the compensation figures in the proxy statements.
Soaring executive pay has drawn criticism from investors and lawmakers. Massachusetts Democrat Barney Frank, the chairman of the U.S. House Financial Services Committee has characterized executive compensation as having run amok.
Recent big exit packages for two prominent executives, ex-Pfizer (PFE.N) chief Hank McKinnell and former Home Depot (HD.N) CEO Robert Nardelli, has further fueled the debate over executive compensation.
Cox, a former Republican congressman from California and a strong advocate of free markets, has said it is in the interest of shareholders to get the best possible executive talent at the lowest possible price.