Last Friday, right before Christmas, at 1:22 pm (according to my e-mail server), the Securities and Exchange Commission released a new XBRL-based tool that allows users to compare executive compensation packages at the 500 largest U.S. companies. In the process, it also proved that irony is not the regulator's strong suit.
As you may recall — but, for reasons to follow, probably do not — exactly a year earlier, at 5:15 pm on the Friday before Christmas, the SEC released its now-infamous "Christmas Surprise", a seemingly last-minute change to its new compensation disclosure rules that critics said was timed to receive the least possible amount of media and public attention.
The SEC denied trying to conceal the change; an assertion bolstered in part by the somewhat-delayed firestorm it created instead. Critics charged that the SEC had switched around the disclosure in a way that would seem to reduce the annual amount of compensation reported. Then-incoming chairman of the House Financial Services Committee Barney Frank told CFO.com that the SEC and its Republican chairman had failed to grasp "how greatly they have pissed off America over stock options."
The SEC retorted that the new disclosure actually contained more information, and was now consistent with accounting rules to boot.
Both sides had their points, as we reported at the time. The main beef was whether stock option grants should be recorded in their entirety at fair value the year they are granted (creating a whopping number for lucky execs) or the SEC's new method, which, like GAAP, essentially smoothed that number by spreading the value over the vesting period. The new tool may make some critics happy, as it allows users to calculate the fair value of options granted in the given year. But it seems a somewhat anemic demonstration of XBRL, since it presumably could also include options exercised (pulling from other SEC filings) and, more important, a running tally of the value of unvested or unexercised options from prior years, which would give a much fuller picture of executive compensation.
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