After almost everything that could be said about accounting fraud and corporate misdeeds has been said, the financial media predictably turned a spotlight on highly paid corporate executives. The glare of the spotlight and ugly headlines in part led to the SEC's adoption in 2006 of comprehensive reforms to the executive disclosure requirements for US reporting companies. These principles-based executive compensation disclosures were intended to provide investors with clarity concerning the total value of executive compensation and termination arrangements. The centrepiece of this plain English disclosure initiative was a new section called Compensation Discussion and Analysis, or CD&A, which first appeared in 2007 proxies. The CD&A section was meant to provide a normative discussion from management concerning the operation and results of its compensation process. Well-intentioned registrants and their advisers dutifully complied with the SEC's requirements for detailed disclosure. The result was 30 to 40-page CD&A sections that were anything but transparent.
November 01 2007
