Will the Katie Couric rule survive?
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Will the Katie Couric rule survive?
KAI RYSSDAL: Down in Washington tomorrow the SEC will take on executive compensation. Commissioners will be voting on new pay rules for public companies. But one particular part of the new rules might not make it through. Not dealing so much with executive compensation. But talent that might make more than the bosses. It’s called the Couric clause. After Katie…who’s about to make a bundle working for CBS. Companies already have to disclose compensation information for their top five executives. Ashley Milne Tyte reports the Couric clause could ruffle some feathers.
ASHLEY MILNE-TYTE: The clause got its nickname because it would affect major players like Katie Couric.
KATIE COURIC: . . . But I’m going to be, uh, working on the CBS Evening News . . .
That was Couric on the day she announced her departure from NBC. She doesn’t claim executive status but earns a fortune.
Lots of big companies balk at the idea of publicizing star performers’ pay. Linda Rappaport of law firm Shearman and Sterling says the new SEC rules aim to keep executive pay in check. Otherwise boards and their executives can get too clubby. But when it comes to pay for top talent Rappaport says businesses prefer to keep that secret. Otherwise, firms might have to shell out increasingly hefty amountsa€¦
LINDA RAPPAPORT: Those people, there’s a free market for their pay, and managers of public companies have every reason to try to keep expenses of their companies down.
Shareholders agree. Patrick McGurn of Institutional Shareholder Services says think of top drug industry scientists.
PATRICK MCGURN: Folks that are working and creating value at these firms . . . and the fear from an investor prospective is even providing thumbnail sketches of these individuals and their pay levels could give competitors meaningful information to come in and raid these talents.
And so decrease value in the company. Still, not everyone wants the Couric clause to go. Damon Silvers of the AFL-CIO doesn’t buy the argument that companies would suffer from maximum transparencya€¦
DAMON SILVERS: It’s just not consistent with our experience where in a lot of other circumstances the whole payrolls of many public institutions are public knowledge.
But he’ll take what he can get. His biggest concern is ensuring company decision makers don’t award themselves huge pay packages without the public’s knowledge.
In New York I’m Ashley Milne-Tyte for Marketplace.
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