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Reuters, October 21, 2008 article



UPDATE 1-Bailout bill sets pay disclosure challenges-US SEC

Tue Oct 21, 2008 1:40pm EDT

By Karey Wutkowski

WASHINGTON, Oct 21 (Reuters) - The executive compensation restrictions mandated by the U.S. $700 billion market rescue plan "will introduce new compensation disclosure challenges," an official at the U.S. Securities and Exchange Commission said on Tuesday.

John White, director of the SEC's corporation finance division, said companies participating in the capital infusion plan or asset purchase programs will "need to carefully consider and reflect the new provisions and their ramifications" in their regulatory filings.

He said that even companies not participating in the programs will also likely need to make significant changes to their disclosures to reflect how their pay programs have been changed because of the financial market turmoil.

In the bailout bill passed earlier this month, lawmakers restricted participating companies from giving their departing executives so-called "golden parachutes" and capped the tax deduction to $500,000 of pay for each senior executive.

White, speaking at a conference in New Orleans, also said the SEC's corporation finance division plans next year to conduct a special review of the largest financial firms' annual reports.

The SEC's selective review program is mandated by Sarbanes-Oxley reform legislation. It requires that the SEC review all public companies on a regular basis, but no less frequently than once every three years.

White said the review will include the nine large U.S. banks that have already signed on to receive a total of $125 billion under the U.S. Treasury Department's capital infusion program.

"Our reviews will include both the financial statements and the executive compensation disclosures of these companies," White said.

But he said the new pay requirements placed on participating firms could bleed into other companies. He noted that the bailout bill limits compensation arrangements that could lead executives to take excessive risks -- an idea likely being incorporated by other companies, White said.

"I expect that current market events are already affecting many companies' compensation decisions and thus should be affecting the drafting of their upcoming (disclosures)," he said.

(Reporting by Karey Wutkowski and Rachelle Younglai; Editing by Andrea Ricci and Gerald E. McCormick)


Thomson Reuters Corporate:  Copyright




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