Closer Look Series: Topics, Issues and Controversies in Corporate Governance, No. CGRP-04, By David F. Larcker, James Irvin Miller Professor of Accounting, Director of Stanford Graduate School of Business Corporate Governance Research Program And Brian Tayan, MBA ’03, Stanford GSB, Date: 06-15-2010
Compensation and Disclosure
Compensation packages are intended to attract, retain, and motivate executives to perform in accordance with the long-term financial objectives of shareholders. Disclosure in the annual proxy is expected to be “clear, concise, and understandable.” And yet in recent years, compensation packages have grown increasingly complex in design and disclosure has grown correspondingly difficult to understand.
We explore this issue by comparing the compensation and disclosure of Lorillard in 1948 to that of 2009.
We ask, is it time to simplify things?