SEC Scrutiny

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The Business Journal publishes its list of the most highly compensated chief executives in Los Angeles annually, but this year compiling the data posed special challenges.


And it’s a challenge that investors will notice themselves if they dig into their 2007 proxy statements detailing executive compensation, which is likely to be much thicker than in the past. That’s because the Securities and Exchange Commission is scrutinizing company filings and requiring detailed explanations for compensation to executives.


The goal is for both institutional and individual investors to have the ability to access and comprehend detailed compensation information that includes salary, performance-based and cash bonuses, stock awards and options granted, as well as “other compensation” which includes everything from pension contributions to jet use, country club dues and security.


But while companies are more thorough with reporting, understanding the explanations has become a more difficult process. Filings are longer and riddled with footnotes that can run on for a dozen pages or more.


For example, investors wishing to examine the compensation package of Angelo Mozilo, chairman and chief executive for Countrywide Financial Corp., need to sort through a 79-page document this year. The statement reads like a book, complete with a table of contents. Just two years ago, the company’s proxy statement was limited to 38 pages, and no table of contents was provided.


However, there is hope for the future. The SEC has a goal to create a database of executive compensation that will be interactive, allowing investors to sort through and compare data. This year, though, that database

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