Reining in Executive Comp - 14 June 2009

While the administration is keeping a hands-off approach, thus far, to
imposing salary ceilings on all companies, there continues to be
increased focus on more transparency for executive compensation. New
rules expected to be released by the SEC in July will mandate
additional proxy-statement disclosures, including "say on pay" and
information about potential conflicts of interest by comp consultants.

By Stephen Barlas

The Obama
administration's restrictions on executive compensation announced last
week created a lot of smoke but there wasn't much fire in evidence.

Certainly few people
will get burned, given that the most potentially onerous restrictions
affect only seven large companies and any additional companies who take
Troubled Asset Relief Program funds in the future.

Moreover, while new
federal pay czar Kenneth Feinberg has the authority to set executive
pay for those TARP fund recipients, where he sets those levels is
anyone's guess.

Nonetheless, at a
briefing on June 12, Timothy Bartl, vice president and general counsel
at the Center On Executive Compensation, an offshoot of the
Washington-based HR Policy Association, said he is concerned that any
salary ceilings imposed on TARP companies might find their way into
much more widespread mandates on all public companies -- either via
congressional legislation or administrative action by the Securities
and Exchange Commission, which is scheduled to publish a new rule on
executive compensation disclosure in July.

"The discussion to
apply TARP-type caps more broadly will occur, but I think there will be
an awful lot of reluctance on the part of those who might see such a
step as undermining the recovery," Bartl said.

He welcomed the SEC
intention to revise its exec-comp rules, which have come under fire
from both corporations and institutional investors, and he predicted
the SEC "will look at a lot more than people think when they announce
their plans in July."

Those plans,
according to hearings on June 11 at the House Financial Services
Committee, include mandating additional disclosures with regard to how
a company, and its board in particular, manages risk; how salaries are
set for other executives below the levels now prescribed; and new
disclosure requirements regarding compensation consultant conflicts of
interest, according to the testimony of Brian Breheny, deputy director
of the division of corporate finance at the SEC.

The main focus of the
Center on Executive Compensation regarding any SEC rulemaking is to
convince the agency to revamp the summary pay tables in the

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