Forced Disclosure

STARTING NEXT YEAR, HIGHLY PAID CORPORATE EXecutives are going to have a lot of explaining to do. Under new regulations adopted by the Securities and Exchange Commission, companies will have to disclose in unprecedented detail how much their top executives earn, as well as tell stockholders how those pay packages were determined. The rules are the latest effort in a movement by stockholder groups and politicians to curb excessive pay and perks. Shareholders at 43 corporations, including IBM, Bell Atlantic and Chrysler, challenged CEO compensation this year. And at least two pay-disclosure bills have been introduced in Congress.

The new SEC rules will require companies to publish charts in their annual reports that compare salaries with stock prices. Companies will also have to assign values to the stock options that executives receive. Although the regulations will provide shareholders with more ammunition to fight what they consider to be unwarranted compensation, many critics say the new law doesn't go far enough. They want to give shareholders the right to determine the actual pay of top executives. Others want to get at it by limiting corporate tax deductions for excessive salaries.