Executive Compensation Disclosure Rules: Son of Sarbanes?

As the demand for greater executive compensation disclosure intensifies, CFOs are heading for a "Holy Cow" moment. The shock will have nothing to do with tally sheets, whose revelations of true executive compensation have been raising investors' and directors' eyebrows recently. No, it will have everything to do with the amount of additional work and responsibility finance executives will bear under new executive compensation disclosure rules.

"Generally speaking, more disclosure and more information in the hands of the investing public is a good thing," says Doug Bettinger, CFO of Los Gatos, Calif.-based 24/7 Customer, a company that provides business process outsourcing (BPO) and offshore call-center services. "You want investors to know you're managing the company thoughtfully. But there is a flip side: Running an organization while complying with rules and regulations is becoming more and more taxing."

Regulators may have a difficult time striking the right balance now that executive compensation has become a political hot potato. In the past, the controversial topic tended to surface each spring during proxy season. "By fall, everybody would forget about it," says Myrna Hellerman, a senior vice president with Sibson Consulting, the human-capital consulting division of The Segal Company in Chicago. "It isn't that way any more. The discussion just doesn't go away now." More questions about the timing of stock-option grants are being raised, and perceptions of executive-pay problems seem to have reached a critical mass among boards, shareholders and employees. In late April, an IBM employee stood up at the company's annual meeting and asked CEO Samuel Palmisano if he could manage to live on the $10,000 per day that his executive pension might provide.