SEC to propose pay rules

February 13, 1992|By New York Times News Service

WASHINGTON -- Under growing pressure from lawmakers and shareholders to make companies more accountable for executive pay, the Securities and Exchange Commission will propose today rules requiring publicly traded companies to disclose more fully how much their executives are paid and to give stockholders the right to vote on compensation.

As layoffs and hard times continue, public outrage has grown over the increasing number of multimillion-dollar compensation packages offered to executives, many of which include lucrative stock options as well as big salaries and bonuses.

The new rule on executive pay would require that a complete and understandable list of compensation accompany the descriptions of paypackages to senior officials in the annual statements of publicly traded companies filed with the agency. The descriptions have been criticized as being indecipherable.

A second part of the plan would enable shareholders to vote on executive pay.

It involves a reinterpretation of the rule that sets the standards for when shareholders may bring corporate issues to a vote.

In a third change, SEC Chairman Richard C. Breeden is expected to direct the new chief accountant at the agency to work with the Financial Accounting Standards Board to study whether to change an accounting rule that permits companies to give stock options to executives without taking a charge against earnings. The options can cost the companies millions of dollars when they are exercised.

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