Dale Oesterle at the Business Law Prof Blog offered some interesting commentary on the SEC's proposed Rules on Executive Compensation. His post, Latest on New SEC Rules on Executive Compensation, notes that boards "are starting to give executive pay based on performance targets" but laments that the SEC's proposed rules don't require the disclosure of those targets to shareholders. While he agrees that such information ordinarily should be treated as "sensitive, confidential business information," the SEC nevertheless should have required disclosure due to the "gross lack of control over executive compensation exhibited in the last ten years by corporate boards."
On a related note, the Institutional Shareholder Services Corporate Governance Blog has an interesting post about a new report released by RREV, the UK corporate governance body. The post, Constructive Dialogue Improving Executive Pay Practices in the UK, describes some of the highlights. They include:
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that companies now regularly "consult shareholders and shareholder representatives when introducing any significant change to executive remuneration arrangements";
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that the report identifies trends in executive compensation;
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that because "bonus targets are rarely disclosed," it is not clear that increases in executive pay accompanies "more challenging" targets; and
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that regarding the disclosure of performance targets, "RREV's position is that there is little justification for the lack of acceptably detailed retrospective disclosure of the targets and associated performance after the performance year has ended."
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