It’s not the adjustments to GAAP numbers in setting executive compensation that bother investors. It’s the lack of clarity about how those non-GAAP measures are calculated.
That’s what prompted the Council of Institutional Investors to petition the Securities and Exchange Commission for a change to the rules about the use of non-GAAP measures in proxy statements’ Compensation Discussion and Analysis. “There can be legitimate reasons for excluding certain non-GAAP items when computing executive pay,” said Robert Pozen, senior lecturer at MIT and former president of Fidelity Investments. “We’re just asking for much better disclosure.”
