SEC proposes exec pay rules

The Securities and Exchange Commission voted unanimously to propose a number of changes to the disclosure rules for executive pay packages. In an attempt at greater transparency, the proposal would require companies to provide tables in annual filings showing the total yearly compensation for their chairman, chief financial officer and the next three highest-paid executives.

The SEC proposal also would lower the level at which total executive compensation must be detailed, from $50,000 to $10,000. Disclosure tables detailing executives' retirement benefits and the compensation of company directors would be required, and companies would be required to explain the objectives behind their executives' compensation. The proposal will be open to a 60-day public comment period and must then be formally adopted by the SEC.

AIG could pay $1.5B over charges

American International Group Inc. could pay as much as $1.5 billion to settle civil investigations by state and federal authorities into an accounting scandal. New York Attorney General Eliot Spitzer and the New York State Insurance Department filed a suit against AIG and ousted former chief executive and longtime chairman Maurice "Hank" Greenberg in May 2005, alleging that the company and Greenberg had resorted to accounting fraud to boost its results and stock price.

According to reports, a settlement was likely near the beginning of February, and would include a deal with the Securities and Exchange Commission. The SEC has yet to bring any charges against AIG, but it is not uncommon for the agency to file and settle charges on the same day. The deal does not include a settlement with Greenberg or former AIG chief financial officer Howard Smith.

PCAOB offers small biz audit forums

The Public Company Accounting Oversight Board will continue its forums on auditing in the small business environment throughout 2006. The forums, which began in 2004, are designed to help share information concerning the PCAOB with registered public accounting firms and public companies operating in the small business community. Held in 10 cities for the past two years, the forums have enabled board staff to meet with more than 1,000 people in order to share insight into the work of the PCAOB, including the inspections process and the impact of new auditing standards.

The remaining 2006 forums are scheduled for: Fort Lauderdale, Fla. (Feb. 27 and 28); San Antonio (May 2 and 3); Seattle (June 21); Boston (Sept. 8); Philadelphia (Oct. 16); New York (Nov. 7 and 8); and Chicago (Dec. 7).

The events are free, though pre-registration is required. More information is available at www.pcaobus.org.

SEC makes IBM probe formal

The Securities and Exchange Commission has launched a formal investigation into an accounting change made by IBM in 2005. Last April, IBM voluntarily made the change to start deducting the cost of employee stock options from its profits, an accounting rule that now applies to all U.S. companies. The SEC is concerned that the change may have been a way of disguising a lackluster first quarter.

In June, IBM announced that the SEC was conducting an informal investigation. By making a formal inquiry, the SEC has the power to subpoena documents, e-mails and testimony of individuals at the company. Spokesmen for IBM said that the company is fully complying with the agency.

Correction

"One size doesn't fit all" (Nov. 7-27, 2005, page 22) implied that NetSuite was an open-source product; however, while resellers can customize it, NetSuite does not provide code to the public.

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