For many companies, the new executive compensation disclosure rules will require disclosure of numbers that have never been publicly disclosed before. What will be the impact?

• Last years executive compensation hullabaloo was over perks:  what you had to put in the proxy statement about your jet-setting CEO these disclosures were mostly a rounding error in the overall compensation picture.  This year could be very different.  With the new SEC executive compensation disclosure rules in place, we may see a slew of revelatory disclosures.
• As youll recall, Dick Grasso was the CEO of the New York Stock Exchange for many years.  There was shock and outrage in many quarters when it came to light to that Grasso was to get a payout of $140 million when he left the NYSE.   Eliot Spitzer sued.   Its still being litigated.  One of the issues was that Grassos payout got so big because of a multiplier effect.   Increases in Grassos annual pay triggered increases in his retirement plans.  There were questions about whether the board fully understood the total payout to Grasso as they approved his pay increases over the years. 
• The new SEC executive compensation disclosure rules will require tables to show the full-amount of these sorts of payouts.  Until now, SEC rules havent required clear disclosure of these amounts.  If a company had a Dick Grasso problem you wouldnt necessarily know it.  M&A deals have sometimes triggered disclosure of previously undisclosed CEO pay packages North Fork Bank recently had to reveal a nine-figure payout to its CEO when it was getting sold to Capital One.  The size of North Forks payout to its CEO made the cover of the Wall Street Journal when it came out.  Youd never have known from the annual proxy statements.
• The wild card is how many of these nine figure totals are out there.  These totals build over a career; they can get big fast if theres a multiplier effect at work.  There could be a lot of these nine figure totals that come to light this year for the first time, not always deserved.  Its notable that ISS (the very influential proxy advisory firm) has recently said it will recommend that its institutional investor clients vote against compensation committee members at companies that have poor compensation practices.  If a lot of companies have a Dick Grasso problem, it may even get the interest of a new Congress in control of the Democrats.

Pfizer CEO

• Form 8-K 12.21.06

• Termination agreement 12.18.06
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