Good Luck Figuring out New Proxy Statements

Article excerpt

Byline: Mark Basch

The Securities and Exchange Commission this year instituted new rules that expand the disclosure of executive pay packages in company proxy statements. As an Associated Press story reported in January, the goal was to make the proxies clear enough so shareholders "won't need an MBA to decipher the numbers."

Well, I have an MBA, and I'm having trouble deciphering the numbers.

April is proxy season, as most Jacksonville companies file their yearly statements in anticipation of their annual shareholder meetings. And as the first reports come in, it looks like it's still difficult to figure out just how much a CEO makes.

Take Jacksonville's biggest company, CSX Corp., which filed its proxy 10 days ago. The proxy says that Chairman and CEO Michael Ward received a compensation package totaling $13.77 million in 2006.

Does that mean that Ward deposited $13.77 million into his bank account? No.

The new rules require companies to put dollar figures to items such as restricted stock and stock options that executives haven't necessarily cashed in. It's supposed to give investors a better idea of the value of benefits executives receive.

In Ward's case, his package included $6.4 million in stock awards that, according to the proxy, is an estimate based on "likely" performance. "Any amounts actually paid are dependent on performance achievements in 2007 and 2008 which are substantially uncertain," it said.

Ward's package also included $3.7 million representing the "change in pension value and nonqualified deferred compensation earnings." Everybody clear on that?

When all the Jacksonville-based companies turn in their proxies, we'll give you a fuller report on what local CEOs made last year, as stated in the proxies. …