New Yorker (October 21)
“In 1965, C.E.O.s at big companies earned, on average, about twenty times as much as their typical employee. These days, C.E.O.s earn about two hundred and seventy times as much.” Two close that gap, the Securities Exchange Commission (SEC) will require “companies to disclose the ratio of the C.E.O.’s pay to that of the median worker.” This is unlikely to help. “Even as companies are disclosing more and more, executive pay keeps going up and up. This isn’t a coincidence: the drive for transparency has actually helped fuel the spiraling salaries…. It gives executives a good idea of how much they can get away with.”
Tags: C.E.O., Disclosure, Executives, Median worker, Salaries, SEC, Transparency
Financial Times (August 19)
Auditors bear some blame for the financial crisis, yet little has been done to improve the quality of their audits. The Public Company Accounting Oversight Board (PCAOB) has now proposed more detailed disclosure to highlight items of concern, even when a company passes the audit. “The Securities and Exchange Commission, which has the final say, should adopt the PCAOB’s proposal. This would match similar rules passed by the UK’s Financial Reporting Council…. Pass-fail cannot distinguish accounts that pass with flying colours and those that barely scrape by. Investors deserve better – and investors are auditors’ true constituency even if managers are their employers.”
Tags: Auditors, Audits, Disclosure, Financial Crisis, Financial Reporting Council, Investors, Pass-fail, PCAOB, Quality, Rules, SEC, UK
New York Times (July 14)
“The median compensation of chief executives at 200 of the nation’s biggest public companies came in at $15.1 million last year, a 16 percent jump from 2011…. The pay packages — including salary, bonus, benefits, stock and option grants — ranged from $96.2 million at Oracle to $11.1 million at General Motors.” Until the SEC determines rules for Dodd-Frank disclosure requirements, however, we won’t know just how excessive these packages are. Corporations should disclose pay gap information so investors, consumers, economists and others can monitor the ratio of C.E.O. pay to regular employee pay, which by some estimates now stands at between 200 and 300 to 1 in the U.S.“The median compensation of chief executives at 200 of the nation’s biggest public companies came in at $15.1 million last year, a 16 percent jump from 2011…. The pay packages — including salary, bonus, benefits, stock and option grants — ranged from $96.2 million at Oracle to $11.1 million at General Motors.” Until the SEC determines rules for Dodd-Frank disclosure requirements, however, we won’t know just how excessive these packages are. Corporations should disclose pay gap information so investors, consumers, economists and others can monitor the ratio of C.E.O. pay to regular employee pay, which by some estimates now stands at between 200 and 300 to 1 in the U.S.
Tags: Benefits, Bonus, Compensation, Disclosure, Dodd-Frank, Executive, General Motors, Options, Oracle, Pay gap, Requirements, Salary, SEC
New York Times (August 2)
The Securities and Exchange Commission (SEC) fined Citigroup $75 million for misleading shareholders. “Too big to fail” author Andrew Sorkin notes the irony. This settlement punishes the shareholders, the very “same people who were arguably defrauded by its [Citigroup’s] failure to disclose its exposure to subprime mortgages in the first place.” The SEC admits this is “awkward,” but claims corporate settlements best encourage companies to obey disclosure regulations. Former SEC Chairman Harvey Pitt has a different opinion, “a class of innocent shareholders is being asked to pay for the misconduct of corporate officers.”
Tags: Citigroup, Disclosure, Fine, SEC, Shareholders
