SEC Asks Firms to Detail Top Executives' Pay

The Wall Street Journal reports:

Stepping up its campaign to shed light on the mysteries of executive pay, the Securities and Exchange Commission has sent letters to nearly 300 companies across America critiquing disclosures in this year's proxy statements and demanding more information.

The SEC's requests could set up a confrontation over details the agency wants that companies say are competitive and should remain secret. The federal securities regulator, for example, wants to know more about the targets and benchmarks companies use when they tie pay to performance.

The SEC's letters, which were faxed to chief executive officers, have caused much consternation -- and some complaints. Companies are racing to set up emergency meetings of their board compensation committees to answer the questions. Some are considering lobbying as a group against certain SEC requests, such as providing more information about specific performance goals, lawyers say.

Companies contacted by the SEC are of all sizes and come from a variety of industries, corporate lawyers say. Recipients of the letter include drug makers Pfizer Inc., Schering-Plough Corp. and Bristol-Myers Squibb Co.; insurance firm Prudential Financial Inc.; Coca-Cola Co. and General Electric Co. American Express Co. is expecting to receive one, according to a person familiar with the matter. "CEOs aren't used to getting communications from the SEC," said one attorney. "They're a bit anxious." In forwarding his letter to a colleague, one annoyed chief scrawled in the margin: "What the hell is this?"

In the case of Pfizer, the SEC asked the big drug maker to more fully describe the work performed by the board's independent pay consultant. "I don't think this kind of detail will be of additional benefit to investors," sniffed a person familiar with the situation. "Do they want [Pfizer] to tell how many Diet Cokes he drank at the meetings?"

No word yet on the SEC asking municipalities what government workers do before some muni-bond underwriting floated.