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Company managements have also been accused of "spring loading" option grants. That's the practice of granting options just before a company announces positive news to the investment community, a phenomenon that often results in a pop for stock prices.
And -- here's a real sicko revelation -- between Sept.
17 and Sept. 30, 2001, while Americans (and stock prices) were deeply
depressed following the infamous Sept. 11 terrorist attacks, more
than 500 executives at 186 companies received stock-option grants
that would soon be worth a ton of money. Coincidence, you think?
A Wall Street Journal analysis reveals the following gruesome statistic: "The number who received grants was 2.6 times as many as in the same stretch of September in 2000, and more than twice as many as in the like period in any other year between 1999 and 2003."
It's all fair now
Executive compensation issues have been under a cloud, to be sure, and shareholders have increasingly expressed their fury at annual shareholder meetings in recent months. In response, last week, the SEC approved new rules that will require companies to shed light on exactly how much the top five senior executives of a company get paid. The compensation of board directors will also be fully disclosed.
"With more than 20,000 comments, and counting, it is now official that no issue in the 72 years of the Commission's history has generated such interest," SEC Chairman Christopher Cox said in a press release. "Shareholders need intelligible disclosure that can be understood by a lay reader without the benefit of specialized expertise or the need for an advanced degree."
Beginning next year, shareholders who read their annual reports and proxy statements should brace themselves for real page-turner thrillers that rival any novel by Elizabeth George.
Among the things that shareholders can expect to see plainly disclosed in a table format are:
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Annual reports and proxy statements: |
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An accompanying narrative description will outline severance provisions and payment arrangements that are in place in case of a company merger, acquisition or event that results in new responsibilities for (or termination of) senior executives. Company perquisites exceeding $10,000 must be listed.
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