SEC Unanimously Approves Proposed Data Tag Rule

Posted on May 16, 2008 by Jack J. Gravelle
On Wednesday the SEC unanimously voted to propose a rule that calls for companies to report their financial data using interactive data tags that uniquely identify individual financial statement items. The data tags are often referred to as extensible business reporting language (XBRL).

The data tags allow the information in financial statements to be more easily searched and compared by investors, analysts, and the general public. SEC comments suggest investors will be the main benefactors of the new system with no word yet on the expected cost of compliance. Presumably, if investors will benefit from the ease of financial statement comparisons, companies that perform well in such comparisons will also benefit by attracting the investors.

Under the proposed rule, the largest companies (public float above $5 billion) must use the data tags beginning in 2009 for fiscal periods ending late 2008. All other public companies will report using data tags over the following two years.

The SEC will post the proposed rule on its website when available, and public comments will be accepted for 60 days.
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Say on Pay Update

Posted on May 8, 2008 by Jack J. Gravelle

Earlier this week Aflac became the first large US company to offer shareholders the opportunity to approve compensation for top executives. Faced with an up or down vote, the shareholders resoundingly approved the $12 million pay package by a vote of 93 percent.

Institutional investors and shareholder services have pushed proposals to give shareholders the opportunity to approve pay packages for the past three years. Some companies have asked shareholders to reject such measures. Last year, 43 percent of proposals received shareholder support. This year, the approval rate is at about 42% according to Risk Metrics.

A shareholder vote against a specific compensation package is troublesome because there is no way to know what it means. Different shareholders vote no and yes for different reasons so it is difficult to know which aspect of the compensation is being rejected, or more importantly, what type of compensation package a majority of shareholders would support.  

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