John White, director of the Securities and Exchange Commission’s division of corporation finance, said that all U.S. companies, not just those in finance, should consider limiting compensation packages that reward excessive risk-taking by executives.
In the coming year, the SEC will examine the filings of the largest U.S. financial institutions to review disclosures about executive pay as well as annual reports and periodic filings, according to The Wall Street Journal. Nine companies have agreed to participate in the Treasury Department’s taxpayer funded, equity-injection program.
In Australia and the U.K., regulators are already working toward restricting compensation across all companies, including those not being bailed out.
White also commented during a speech to a New Orleans conference on Tuesday that all compensation committees, when setting performance targets, should consider any risks an executive might make to meet target goals. He said companies should weigh “what Congress might want” prudent corporate boards to do, according to WSJ.
White said that bailout and non-bailout companies should review their policies carefully. “[Companies] should not merely be marking up last year’s disclosure. Instead, you should be carefully considering if and how recent economic and financial events affect your company’s compensation program,” he said.