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Friday, May 12, 2021

Fat financial deals designed to snare high-flying corporate talent soon will have nowhere to hide, if the Securities and Exchange Commission gets its way. A proposal that would require publicly-traded companies to disclose how much money they’re paying their best-compensated non-executive employees is raising plenty of hackles:

The entertainment industry is abuzz over the so-called “Katie Couric” clause in a broad SEC plan for publicly traded companies to give shareholders more information about multimillion-dollar salaries. The designation comes from “Today” show co-host Couric, who is leaving NBC at the end of May to join CBS as anchor and managing editor of “The CBS Evening News With Katie Couric” for a reported salary of $15 million over five years Correction from Reuters/AP: An estimated salary of $13-15 million annually for five years.

The SEC proposal — aimed mainly at prying loose more information on the pay of top corporate officers — also would force companies to disclose salary figures for up to three workers whose compensation exceeds that of its top executives.

Of course, companies CEOs, Presidents, CFO, etc. salaries already are required reporting items on the 10-K; but they’re widely seen as skeletal, base-pay figures that come nowhere near representing all the perks and extras the C-level boys get. Naturally, the SEC would like to get a truer picture of how much money is being made. The Katie Couric provision wouldn’t do this alone; I presume the rest of the proposal is calculated to unlock the secret.

While the loudest protests are coming from the entertainment industry, other companies oppose it as well.

Kellogg, the world’s largest maker of breakfast cereal, told the SEC the plan would give rival companies crucial salary information.

Disclosure of the salary of a highly paid non-executive like a salesperson “could cause employee morale issues and provide our competitors with sensitive information that could be used to solicit the employment of our salespeople,” it said.

Media companies are using the same argument.

“The disclosure requirement could have the effect that producers, talent and other individuals would prefer not to be employed by publicly held motion picture companies at all,” said Linda Rappaport and George Spera, of Shearman & Sterling, who wrote the SEC on behalf of several movie studios.

Companies would not be required to name their top non-executive earners under the proposal, but they said the identities would be easy enough to figure out.

DreamWorks CEO Jeffrey Katzenberg also complained in a letter to the SEC that stars’ salaries have less value to shareholders because there is less conflict of interest when negotiating those amounts than in the case of executives’ salaries, which are set by members of the board of directors.

Funny, these companies don’t always have a problem citing their star-level payroll when it’s convenient. For instance, last year the Tribune Co. highlighted its first-quarter $13.5 million charge on account of the trade of Sammy Sosa by its wholly-owned Chicago Cubs baseball team. Sosa’s contract, like that of all major-league pro athletes’, was public knowledge anyway (although even there, it’s rare that much beyond the base salaries are readily known). In fact, in the sports/entertainment fields, such info is already widely disseminated, officially and otherwise. It’s a more prickly matter in other fields, of course.

Frankly, all this will do is force the accountants to get even more creative with the smoke and mirrors. But even fictionalized ledger items would be a hoot to read.

by Costa Tsiokos, Fri 05/12/2021 09:20pm
Category: Baseball, Business, Media
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