Lie Comments on New SEC Rules
Bookmark & ShareJuly 26, 2006
Source: U.S. News & World Report
The Securities and Exchange Commission voted unanimously today to require that public companies explain in plain English and easy-to-read charts exactly how much their top five executives earn and to provide a single number that includes pensions, stock options, and benefits such as life insurance and moving subsidies. Until now, companies were often able to hide many aspects of their executives' pay packages. The values of retirement accounts and golden parachutes -- payments promised to executives who are let go -- were often buried in footnotes. Meanwhile, the SEC is looking into allegations that executives at as many as 80 companies may have secretly granted themselves valuable stock options by allowing themselves to buy stock in the future at an old, low stock price, a practice called "backdating." The changes were hailed as improvements by businesses as well as investor watchdogs. ERIK LIE, the University of Iowa economist whose research is credited with discovering the stock-options backdating scandals, said the new rules should reduce executives' opportunities to make improper option profits.
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