Sotheby's Refuses to Disclose Executive Pay Criteria

Philip Boroff of Bloomberg is reporting that Sotheby's, a publicly traded company has said to the Securities and Exchange Commission it will not reveal the criteria is has set for determining executive pay. Sotheby's believes that by disclosing detailed information on executive pay, its major competitor Chirstie's will gain an unfair advantage and therefore cause harm to Sotheby's. Christie's is a privately held company and it does not have to make such public disclosures.

Boroff states

Sotheby’s was responding to a recommendation in May from the SEC to improve its explanation of executive pay, something it also asked of Microsoft Corp. and Coca-Cola Co., among others. Amid calls for more corporate transparency, Sotheby’s case illustrates the challenges of a publicly held company when it has a closely held rival.

Sheridan also rejected an SEC request to give specifics on how the auction house’s bonus pool is derived from earnings, saying that “would enable our competitor to understand how much of our resources are being or have been devoted to compensation and how much might be available to other corporate purposes.”

Competitive Position

Sheridan wrote the SEC that Sotheby’s will provide more details on bonuses and how they’re set in future filings, as long as the company believes the information doesn’t harm its competitive position. The company devoted about 13,000 words in its March proxy statement to executive compensation.

The SEC’s Division of Corporate Finance periodically reviews filings to monitor and improve public company accounting and disclosure, according to the SEC’s web site. The SEC has made public its correspondence with companies since 2005.

After Sotheby’s and the regulator had a back-and-forth about pay and other disclosures, Kathleen Collins, an SEC accounting branch chief, wrote back in August that the SEC completed its review and had no further comments, the letters show. In an interview, Sheridan called the SEC review routine and said Sotheby’s was pleased with the outcome.

To read the full Bloomberg article, click HERE.