SEC Not Pleased with Detailing of Exec Pay; Sends Second Round of Letters

Unhappy with answers it received in response to letters sent last summer to 350 companies critiquing their descriptions of executive pay, the Securities and Exchange Commission has sent second-notices out to the majority of those companies, reports the Wall Street Journal.

Of 26 companies whose cases were closed, 21 were blamed for not giving adequate information on the role of individual performance in their pay decisions. In writing to one company - Bristol-Myers Squibb - the Commission said that individual performance was a primary determinate of compensation, but that the company didn’t properly detail how the measure translated to the compensation it handed out, according to the Journal.

In a letter last October, Bristol-Myers Squibb General Counsel and Corporate Secretary Sandra Leung said that the company will elaborate in future filings “on the manner in which the named executive officers’ performance against individual financial and operational objectives…impacted their resultant compensation.”

The escalating scrutiny by the SEC could spark changes in the ways companies calculate pay, including the moving away from individual performance as a measure of success, an area the Commission views as particularly weak in favor of companywide financial targets like earnings or stock prices, the Journal reports.