Unhappy with answers it received in response to letters sentlast summer to 350 companies critiquing their descriptions of executive pay,the Securities and Exchange Commission has sent second-notices out to themajority of those companies, reports the Wall Street Journal.
Of 26 companies whose cases were closed, 21 were blamed fornot giving adequate information on the role of individual performance in theirpay decisions. In writing to one company – Bristol-Myers Squibb – the Commission said thatindividual performance was a primary determinate of compensation, but that thecompany didn’t properly detail how the measure translated to the compensationit handed out, according to the Journal.
In a letter last October, Bristol-Myers Squibb GeneralCounsel and Corporate Secretary Sandra Leung said that the company willelaborate in future filings “on the manner in which the named executiveofficers’ performance against individual financial and operationalobjectives…impacted their resultant compensation.”
The escalating scrutiny by the SEC could spark changes inthe ways companies calculate pay, including the moving away from individualperformance as a measure of success, an area the Commission views asparticularly weak in favor of companywide financial targets like earningsor stock prices, the Journal reports.