SEC: Investors need transparency on exec pay
Proposes requiring companies to tell shareholders more about policies and qualifications.
WASHINGTON (Reuters) -- U.S. securities regulators proposed requiring companies to tell shareholders more about pay policies and board members' qualifications amid public anger that lax corporate oversight allowed top executives to take excessive risks.
The Securities and Exchange Commission voted on Wednesday to require companies to disclose more information about directors along with more details on how compensation policies can create incentives to take unwarranted risk.
"Mandatory disclosures is at the core of what the SEC has done," Troy Paredes, a Republican commissioner, said at an agency meeting. "Disclosures empower investors with information."
Under the SEC's proposal, companies would have to discuss and analyze compensation policies for all employees, not just top executives. This information would have to be disclosed if risks from compensation policies could have an effect on the company.
The Obama administration is seeking to clamp down on excessive executive pay amid outrage from lawmakers and the public that some executives were raking in big pay packages even as the government propped up their companies.
The administration wants the SEC to have power to insure that corporate pay committees are sufficiently independent from management.
The SEC proposed requiring companies to disclose fees paid to compensation consultants when they help determine how much an executive or director should be compensated.
Under the SEC proposal, companies would only have to disclose this information if the same consulting firm provides other human resources services for the company. The other services would also need to be disclosed.
The SEC also proposed requiring companies to include the estimated value for stock options granted during the year in the "summary compensation table" for top executives.
The table now includes the value of option grants that became vested, or eligible to be exercised, during the year. 
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