WASHINGTON – Companies will have to disclose their executives’ pay and perks in greater detail under an overhaul of reporting rules approved Wednesday.
Included are new rules on disclosure of the dating of stock option grants to executives, as a scandal spreads through corporate America over suspect timing of option awards.
The Securities and Exchange Commission members voted 5-0 to adopt the plan. It will take effect Dec. 15 so companies’ 2006 annual reports issued early next year will reflect the changes.
For the first time, public companies will be required to furnish tables in annual filings showing the total yearly compensation for their chief executive officers, chief financial officers and the next three highest-paid executives.
Most of the disclosures, in annual reports and other regulatory filings, will have to be written in plain English.
The plan is designed to enhance corporate accountability and address an issue that has angered company shareholders and the public.
In the SEC’s 72-year history, no other issue has stirred as much interest, with more than 20,000 letters filed during the public comment period that followed the proposal being floated in January, according to SEC officials.