This CFO.com article reports that foreign companies will be exempt from portions of the proposed SEC executive compensation rules (they will only have to report total compensation unless required to provide more disclosure in their home countries). The article characterizes this as a â€œsmall bone being thrown to foreign companies, . . .; many of them have complained about what they perceive to be the overly stringent and expensive requirements of the Sarbanes-Oxley Act.â€?
I have two thoughts to add:
1. Maybe it’s a small bone for the NYSE too. It has also complained about SOX. As noted here, SOX is likely deterring foreign firms from listing in the U.S. Lost listings mean less profits for the now for-profit exchange. The NYSE is doing its part to attract foreign listings; foreign companies can gain exemption from many of the NYSE corporate governance listing requirements under this NYSE rule.
2. In most (all?) other countries, executive pay is not anywhere near the level it is in the U.S., so reduced disclosure requirements could be justified on this ground. According to a recent W$J article, â€œ[t]he average CEO’s salary in the U.S. is 475 times greater than the average worker’s salary. In Japan, it is 11 times greater; in France, 15 times; in Canada, 20; in South Africa, 21, and in Britain, 22.â€?
It is also likely that the concession to foreign issuers is related to executive safety. In Mexico, for example, executive compensation disclosures are on an aggregated basis, i.e., compensation for a group of executives is disclosed rather than for a single executive. Corporations are rightly concerned that too much disclosure makes their executives higher-profile targets for kidnappers.