SEC may force companies to disclose pay of lower-ranking employees

Posted Jun 5th 2009 12:10PM by Zac Bissonnette
Filed under: Law

The Securities & Exchange Commission may force public companies to disclose more information about how they compensate their lower-ranking employees, but there's a catch: They still wouldn't have to say how much they're paid.

The Wall Street Journal reports (subscription required) that "The Securities and Exchange Commission plans to propose that companies disclose in general terms how they compensate lower-ranking employees, expanding disclosures for the first time beyond the executive suite."

There's nothing really wrong with this, but there's nothing really right about this either -- it will just add a few more lines of boilerplate to the already excessively legalistic 10-Ks and proxy statements filed by public companies each year.

For instance, under the current system, all companies are currently required to disclose information about their relationships with and dependence on their employees.

From Microsoft's (NASDAQ: MSFT) latest 10-K:
Our success is highly dependent on our ability to attract and retain qualified employees. None of our employees are subject to collective bargaining agreements.
From Visa's (NYSE: V) latest 10-K:
We consider our relationships with our employees to be good.
From Bank of America's (NYSE: BAC) latest 10-K:
None of our domestic employees are subject to a collective bargaining agreement. Management considers our employee relations to be good.

I picked these at random, but trust me, they're all like this. None of these disclosures is even remotely enlightening. They just fill a space that has to be filled in a 10-K. Did we really need to be told that Microsoft needs good employees to be successful?

If the SEC implements a rule to require companies to disclose information about how employees are paid without requiring specific numbers, it will just serve to make SEC filings longer but no more informative.

Tags: Disclosure, Executive Compensation, Executive Pay, ExecutiveCompensation, ExecutivePay, inthenews, SEC