Much of that growth reflects the trend towards equity-based and other incentive compensation, which intends to meet the worthy goal of aligning the interests of the corporate overseers of public companies with their shareholders. However, some have suggested that company policies that permit hedging of the company’s equity securities could have the opposite effect. By allowing corporate insiders to protect themselves from stock declines while retaining the opportunity to benefit from stock price appreciation, hedging transactions could permit individuals to receive incentive compensation, even where the company fails to perform and the stock value drops.
Keep in mind that this is only the first in a series of Congressionally-mandated rules intended to improve transparency in executive compensation. The other disclosures are dealing with "pay for performance" contracts and the ratio between the CEO and the average worker's pay.
This proposing release is a positive step in the direction of providing more information to shareholders as to whether the interests of corporate insiders are truly aligned with their own.If you have any concerns, public comments are being accepted.
To read Aguilar's full statement click here.