Shareholder Forum for Options Policies

Forum Home Page

Options Policies Home Page

Program Reference


Financial Times, December 28, 2006 article




Frank takes SEC to task over pay issue

By Stephanie Kirchgaessner in New York

Published: December 27 2006 23:52 | Last updated: December 27 2006 23:52


The incoming Democratic chairman of the powerful House financial services committee on Wednesday said he was considering taking action that would force companies to more clearly define how much top executives are being paid.

Barney Frank said in an interview with the Financial Times on Wednesday that he had initially been satisfied with steps the Securities and Exchange Commission, the chief US financial regulator, had taken to force companies to be more transparent on executive pay issues. But the veteran lawmaker said that a surprise “Christmas Eve” move by the SEC to loosen reporting requirements for the pay of top executives had prompted him to consider adding the issue to his own legislative agenda, which includes a separate proposal that would give shareholders more say on how much executives should get paid.

Mr Frank said he was “very disappointed” with the substance and procedure used by the SEC to reach a decision last week to change the way companies must report stock options. Under the terms of an amendment adopted by the SEC and announced on Friday, companies could, in effect, only report to investors the number of stock options an executive could exercise over a certain period, instead of the total number or value of the options the executive had been granted.

Mr Frank said the SEC’s move was “especially ironic” given the fact that widespread abuses of stock options by executives were currently coming to light.

SEC chairman Christopher Cox on Friday said the new disclosure requirements would more closely conform with standards supported by the Financial Accounting Standards Board and would be easier for investors to understand.

Mr Frank, who was not alerted to the change by Mr Cox, said it was not clear that the SEC had issued the new requirements in a manner that had clearly “minimised discussion” of the issue.

The lawmaker has been supportive of Mr Cox in the past, including a recent initiative by the SEC to relax some of the requirements of Sarbanes-Oxley, the landmark legislation that has come under fire for being too costly to companies.

Executive compensation is expected to hold a prominent position in Mr Frank’s upcoming agenda. When asked about his reaction to the recent disclosure of bonuses at Goldman Sachs, including a record $53.4m bonus for chief executive Lloyd Blankfein, Mr Frank said the payments were “excessive”.

Mr Frank said the payments raised questions about complaints by companies like Goldman about the costs of compliance with Sarbanes-Oxley and litigation.

“I’m willing to look at those costs. [But] if they are really stressed financially, it is kind of a lot of money to be giving out,” he said.





This Forum program is open, free of charge, to all shareholders of the invited corporate participants, and to any fiduciaries or professionals concerned with the investment decisions of those shareholders, according to the posted Conditions of Participation.  The Forum's purpose is to provide shareholders with access to information and a free exchange of views on issues relating to their investment interests described in the Forum Summary As stated in the Conditions, all Forum participants are expected to make independent use of information obtained through the Forum, subject to the privacy rights of other participants.  It is a Forum rule that participants will not be identified or quoted without their explicit permission.

This Forum program has been organized with the support of Hermes Equity Ownership Services, Ltd.  It is the first in an expected series that will be managed by a not-for-profit “Institute” to be established for the purpose of continuing the Forum programs conducted by Gary Lutin.

Inquiries and requests to be included in the Forum's distribution list may be addressed to  The information provided to Forum participants is intended for their private reference, and permission has not been granted for the republishing of any copyrighted material.

All material on this web site is published by Gary Lutin, who is responsible for conducting the Forum.