As I’ve noted before, one of my bigger regrets is the time I spent on the cause of executive compensation disclosure, pretty much all of which was wasted: As I put it here nine years ago:

• Enhanced disclosure was intended to provide a control on such arrangements (“sunlight is the best disinfectant”); now it’s generally believed only to have added fuel to the upward spiral (weeds love sunlight, who knew?). People love to chatter about “pay for performance,” but in practice, performance always gets measured so that pay goes up. At this point, everything to do with executive compensation is perhaps best regarded as a grandiose form of theatre, disconnected from any credible science or psychology.

Nothing has happened since then to change that assessment: you might conclude that companies actually take comfort in grossly overpaying their leaders, all the more to confer on them a quasi-mythic power. The SEC recently held a roundtable as a first step in “one of the first steps in considering whether the current executive compensation disclosure requirements achieve (their) objectives, and if not, how the rules should be amended:” in its current Trump-facilitating form, this almost certainly foretells a significant dilution of the rules ahead. Chair Paul Atkins colorfully commented in his opening remarks that “one might describe the current disclosure requirements as a Frankenstein patchwork of rules. The volume and complexity of these rules may be just as scary to a law firm associate performing a “form check” of a proxy statement, as the monster was to Dr. Frankenstein himself when the monster opened its eyes.” The imagery is perhaps too kind to the rules (which aren’t quite impressive enough to be analogized to a new form of life, albeit of a rather grotesque kind), and somewhat misses the point that law firms like having reasons to issue big invoices, but anyway…

Another commissioner, Hester Peirce, commented:

• Some executive compensation rules seem more responsive to the general public’s curiosity than a genuine investor need for material information. Painstakingly calculated tallies of perks, like rides on the corporate jet, housing allowances for overseas assignments, or car services give us a tiny window into executives’ lives, but do little to fill out an investor’s picture of the company. Lately, our rulemakings have taken a “more is better” approach to executive compensation disclosure. These tack-on rules …do not provide new information. Instead, these rules re-package and re-present data that investors mostly already have. Or they add details that are immaterial. Do investors even look at this “new” information? And if they do, are we confident it gives them a rational basis to evaluate a security’s price?
• Consider, for example, pay ratio disclosure and pay-versus-performance disclosure…The overarching feedback I hear on the rule is that it is a regulatory “tax” on public companies without a corresponding benefit for investors. Management, and the high-priced consultants and lawyers they hire, spend hours preparing the various narratives, tables, and graphs that produce nothing but yawns of disinterest from investors.

Commissioner Caroline Crenshaw put out some thoughts for discussion:

• Long-term data on executive compensation can be both decision-useful for shareholders writ large and can help us evaluate potential weaknesses in the market. For example, we’re just starting to realize the data from our pay versus performance rulemaking in 2022. And, the figures on “compensation actually paid” metrics are potentially revealing. The data show that the highest paid CEO in 2024, using compensation actually paid metrics, made over $6.9 billion. The ratio of CEO to median employee pay at S&P 500 companies rose to approximately 192:1, and at the companies of the 100 highest paid CEOs, that ratio is 348:1. Do larger data sets reveal compensation trends or practices that may foretell problems down the road?

It’s hard to know what to do with that comment though: executive greed and venality, and the corresponding social disruption (manifested in spreading inequality, lack of mobility, fomenting discontent on which the cynical duly prey, etc. etc.) are so prominent in the present day that to vaguely talk of “problems down the road” seems rather pitiful (in its current crypto-abetting, enforcement-lite mode, the SEC is almost certainly doing more to blow up the road than to maintain it). Still, for all my cynicism, it’s hard to buy into the premise that less information in this area would necessarily be better (and complaints about cost are hard to take seriously given how a large portion of executive compensation itself is basically a waste of money). The Trump administration has already overseen the dilution, distortion or outright junking of so much established economic, scientific, cultural, medical and other knowledge, one just wishes for one of its gutted bodies to occasionally take the established line and stick to it. This isn’t the battlefield I’d pick, but then, who would have wished for such a war…

The opinions expressed are solely those of the author.