January 19, 2006, New York Times

Look Who Is Making the Most

WASHINGTON, Jan. 18 - In addition to large paychecks, people like Katie Couric of NBC, the Atlanta Braves third baseman Chipper Jones and James B. Lee Jr., a J. P. Morgan Chase investment banker, have something else in common.

Under a proposal by the Securities and Exchange Commission, their entire pay packages may be made public, along with those of the senior executives at the companies where they work.

Buried in the proposed reporting regulations - the most significant overhaul of compensation disclosure rules in more than a decade - is a change in whose pay packages companies will now have to make public.

Current rules require that companies disclose the compensation of the chief executive and the next four highest-paid executives in management. The new rule, which is expected to be adopted in a few months, will require companies to disclose the pay, severance, bonus, stock and option grants, and retirement packages of the chief executive, the chief financial officer, the next three highest paid executives - and as many as three other employees who receive more than any of the first five.

The proposal permits companies to omit the identity of any the three highly compensated employees and simply list their job titles. But it is likely to sweep in stars like Ms. Couric, Mr. Jones and Mr. Lee as well as highly successful bond traders, top salesmen, studio heads, financiers and athletes.

Commission officials gave several explanations for the proposed change. They said the current reporting requirements might be viewed as misleading because they suggested to investors that the executives listed were the highest paid employees. They said that investors wanting to know how corporate money was being spent would certainly want to know who was getting the highest compensation packages at companies, not just the pay of senior management. And they said that the new rule would make it difficult for companies to hide high compensation packages by changing a person's job title.

"Shareholders deserve to know if there are employees who are paid more than the chief executive, the chief financial officer and other high-paid officers," said Cynthia A. Glassman, one of the five S.E.C. commissioners who endorsed the proposal. The new rules were proposed following criticism of escalating pay packages at many companies with lagging performances. In recent years, the commission has also settled cases against such companies as General Electric, Tyco International and the Walt Disney Company that the agency accused of failing to adequately describe big payments to top executives.

One of the most important changes will require the companies to disclose details of pension plans for senior executives, which can often amount to a third or more of total compensation, as well as severance packages. More details about perks, ranging from club memberships and use of corporate aircraft to tax payments, will also have to be disclosed.

Executives at large companies were generally positive on Wednesday about the proposed changes, in part because the political climate makes it difficult to argue against greater disclosure. But some executives did raise concerns about some of the important details that had yet to be described by the commission.

Steve Odland, chief executive of Office Depot and head of a task force on corporate governance at the Business Roundtable, an organization of chief executives from the nation's largest companies, said business leaders were generally supporting the approach taken by the S.E.C. But he also cautioned that while it sought to satisfy investors, the commission should protect propriety information like details about a company's long-term goals and plans.

"Right now, we can keep such information general," Mr. Odland said. "If you force detailed disclosure, it can tell the competition and the world, 'Here's what we are committed to do in terms of performance and growth.' "

Mr. Odland also raised concerns about any proposal that would force companies to put precise values on unexercised stock options because he said that would overvalue them.

"Companies should simply disclose options awarded and price and not try to value them until they are exercised," he said.

Two Republican members of the commission, Ms. Glassman and Paul S. Atkins, have raised similar concerns, and it remains to be seen whether the commission will ultimately force companies to put a value on option grants.

Executives at some of the companies that have been criticized on compensation issues said Wednesday that they endorsed the proposal.

"My compensation is a use of shareholders' money and shareholders have a full right to know where their money is going," said Daniel H. Mudd, the new president and chief executive of Fannie Mae, the mortgage finance company that has been attacked by both Democratic and Republican lawmakers for large pay packages. "An S.E.C. rule that establishes a standard for all companies is also a very helpful thing. It makes compliance easier."

Gary Sheffer, a spokesman for General Electric, said the company was adopting greater disclosure of compensation well before the S.E.C. settled accusations that the company had not fully disclosed the substantial compensation that its former chairman and chief executive, John F. Welch Jr., received after he retired.

Mr. Sheffer said that a year before the S.E.C. filed its proceeding against the company, G.E. had begun to report more on personal use of aircraft by its top executives, and other perks like security provided to them.

"We continually review how we disclose executive compensation," he said, adding that there will be additional disclosure in the proxy that comes out in March. "The compensation committee is still deciding who and what we will include in that disclosure, but we will definitely try to add more clarity," he said.

Tyco, too, has been steadily increasing the compensation information it discloses, Sheri Woodruff, a company spokeswoman, said.

It needed to tackle any concerns left when L. Dennis Kozlowski, its former chief, and another executive were charged - and subsequently convicted - of looting the corporate coffers. When Tyco's current chief executive, Edward D. Breen, came on board, Ms. Woodruff said, he and the board changed the whole "philosophy of compensation," as she put it, and began disclosing its methods for determining executive pay as well as the actual compensation figures in its proxies, she said.

Claudia Deutsch contributed reporting from New York for this article.