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The new rules will require companies to disclose more information about their compensation practices and the background of their board members.
Starting next year, public companies are required to begin providing a written disclosure of their pay practices for all employees. They must also disclose why they chose their specific leadership structure and outline the qualifications and diversity of their board of directors. Companies will also need to provide information on compensation paid to consultants.
“The Madoff Ponzi scheme and other frauds have caused investors to question whether their assets are safe when they entrust them to an investment adviser,” said SEC Chairman Mary Schapiro. “These new rules will apply additional safeguards where the safeguards are needed most — that is, where the risk of fraud is heightened by the degree of control the adviser has over the client’s assets.”