Unlike in the past, the business world has to face so many disclosure (Refer Box) and corporate governance requirements imposed by the Sarbanes-Oxley Act (SOX). The SOX aims to provide investors with `better and faster disclosure of important corporate events'. In the recent past, the US stock market regulator, Securities and Exchange Commission (SEC) expanded the disclosures required to be made on Current Report on Form 8-K. The new 8-K rules (refer Box) have broad implications on the executive compensation. According to the new rules, an 8-K must be filed within four business days of disclosing the material terms of the agreement regarding executive compensation. The material agreement includes the contracts and compensatory plan arrangements with any top executives including the CEO, Director, and the next four most highly compensated executives. Henceforth, the executive compensation arrangements should disclose issues like employment agreements, stock option plans, cash bonus arrangements, and other forms of executive compensation.
In
the recent past, the executive compensation has always been one of the hottest
topics. There was a flurry of news regarding stock options in the past. In the
recent past, things again exploded with the resignation of the former CEO of Home
Depot, Bob Nardelli. The episode of Home Depot is a leading example of shockingly
high executive pay. |
