Disclosure Committees Must Prepare for New Exec Comp Regime

No one should overlook important remarks by John White, the SEC’s Corporation Finance Director, about how disclosure controls will impact the new executive compensation disclosure regime. Disclosure controls and procedures have been mandated since 2002 for all registered public companies, including foreign private issuers. Eventually, according to Director White, companies will have to ensure that their disclosure controls and procedures cover the new executive compensation disclosure requirements. Companies should begin immediately to plan how their disclosure controls will need to be revised to handle the new executive compensation disclosure regime.

As part of the disclosure controls, he emphasized, companies must ask who will collect and aggregate the different types of information, which may not fit neatly with information collected to meet existing disclosure rules. They must also ask who will be responsible for maintaining and analyzing the information; and ensuring that the company's compensation story in the new CD&A is told correctly. Importantly, companies must determine if their disclosure committees are properly positioned for the task. Finally, there is the question of what can be done to prepare to present executive compensation information in any tagged data format that becomes available in the future.