The SEC's 2007 final executive compensation disclosure rules provide for enhanced disclosure of executive and director compensation, related-person transactions, director independence, and other corporate governance matters. As the final SEC rule states, the intent is "to provide investors with a clearer and more complete picture of the compensation earned by a company’s principal executive officer, principal financial officer and highest paid executive officers and members of its board of directors. In addition, they are intended to provide better information about key financial relationships among companies and their executive officers, directors, significant shareholders and their respective immediate family members.” With a goal of transparency, perhaps organizations should strive to provide customized narratives of how they derived “pay for performance” compensation plans and how they ultimately will provide shareholder value.
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