(The news featured below is a selection from the news covered in Federal Securities Law Reporter, which is distributed to subscribers of Federal Securities Law Reporter.)

Industry Groups Opposed Additional Non-Executive Pay Disclosure

A number of industry groups remain opposed to the SEC's revised proposal to require companies to disclose compensation information for up to three additional employees other than the five named executive officers. The Investment Company Institute noted that funds invest significant amounts in public companies and do not view compensation information about non-executives as material to their investment decisions. Any investor benefit would be outweighed by the negative impact of this requirement on public companies, according to ICI.

In ICI's view, an employee who is not an executive officer by definition does not serve a policy making function and is not a key individual charting the company's future course. Non-executive compensation typically is not set in the same manner as executive compensation, ICI added, but is driven by market forces that reflect the unique skills and functions of those individuals. Since non-executive compensation can be highly variable, ICI said there may be little continuity from year to year in those whose compensation is disclosed.

ICI supported the SEC's recent revisions to the executive compensation disclosure rules and explained that the amount and structure of the compensation paid to key executive officers is material to investors. While the SEC has attempted to address concerns raised in its earlier proposal with respect to the disclosure about the non-executive pay, ICI said there are glaring problems with the revised approach. ICI expressed the view, echoed by many other commenters, that the disclosure could have serious negative implications for public companies.

The Securities Industry Association said the modified proposal is as flawed as the original proposal and should not be adopted. The SIA does not believe the SEC has explained why it believes the information is important enough to be disclosed. Domestic public companies would be the only industry participants to be subject to the new disclosure requirement, the SIA added, which would place them at a competitive disadvantage to domestic private companies, foreign private issuers and U.S. subsidiaries of foreign entities. SIA warned against the potential disruptive effects on internal pay structures if the disclosure is required. If the SEC is determined to proceed, the SIA proposed as an alternative that the SEC require that issuers disclose only whether they have employees with greater total compensation than the lowest paid named executive officer.

The chief legal officers of 14 large public companies submitted a joint letter asking that the SEC not require the disclosure of total compensation for any employees other than named executive officers. The officers do not believe the information is material to investors and would result in inconsistent disclosure practices among public companies. The requirement would impose a significant administrative burden on companies, in the officers' view. If the SEC chooses to go forward with its proposal, the officers asked that the employees not be named in order to lessen the competitive risks.

The Chamber of Commerce said the proposed limitation to employees with responsibilities for significant policy decisions is too vague a standard and would result in regulatory second-guessing and legal liability. The Chamber of Commerce added that refraining from naming the employees would make the proposal more acceptable. If the employees are so important that the additional disclosure is required, it is unlikely that they would be sufficiently anonymous that competitors and others would not be able to identify them, according to the chamber. In the chamber's view, the additional disclosure is not necessary, nor materially important to investors, but may be damaging to companies, individual employees and the U.S. capital markets.

The Business Roundtable also urged the SEC not to adopt the revised proposal because it does not address the concerns raised by the earlier version. However, if the SEC chooses to proceed, the Business Roundtable said it should apply to the three additional employees who receive more compensation than the top three most highly compensated executive officers, regardless of title. The disclosure should also be limited to those who are in charge of a business segment that is disclosed in a company's SEC filings. The employees should not be named and their titles should not be disclosed. Finally, the roundtable said the disclosure should not be required until the 2008 proxy season since companies are working diligently to comply with the new executive compensation rules for the 2007 proxy season.