The more disclosure the better for CEOs

Christopher Cox, the new chairman of the federal Securities and Exchange Commission, is hinting that the agency may demand fuller disclosure of CEO pay, benefits and perks at America's public companies. We support this. Disclosure is good, and the more of it the better.

Disclosure is not a matter of government putting restrictions on private owners. Government is protecting the real owners of America's public companies — the stockholders — from hired hands who would pay themselves in ways they don't disclose. And that is not a prerogative of any employee. Cox outlined the problem in a Sept. 19 story in The Wall Street Journal. The compensation of CEOs, he said, has "migrated away from what is transparent to what is opaque. In many cases, the lion's share of an executive's compensation might come in forms that almost entirely elude disclosure."

This is not an attack on stock options, which are already disclosed. There are strong arguments for the use of stock as incentive payments to CEOs, though options have sometimes been abused.

All forms of compensation, including incentive formulas and perks, ought to be disclosed so that the public can see them. These are public companies, with the public's money in them.

You might expect the AFL-CIO to take an interest in this issue, and it does, but the concern is not limited to unions. Earlier this year, executive compensation consultants Pearl Meyer & Partners did a survey of 88 institutional investors. It turns out that the professionals who invest tens of billions in employee pension funds have views on this question that are not too different from the union folks. Three-quarters of these investors thought the average CEO pay at major companies is too high.

We do not think the government should set CEO pay. But the people who do set it should do so in full daylight. If that embarrasses them, particularly in front of the stockholders who sign proxy cards, they might think twice about whom they represent.