SEC Unveils XBRL Tool for Executive Pay

The SEC's long-awaited demo of the power of electronically tagged financial information is up and running at the Commission's Web site. The Executive Pay Finder uses extensible business reporting language (XBRL) to provide instant access to executive compensation data for 500 large companies that have filed proxy statements with the SEC.

It offers some impressive features, including links to the proxy statements and functionality that lets users compare executive pay at different companies side-by-side, in table or graph format. And the data can easily be downloaded into Microsoft Excel for further analysis.

Not surprisingly, SEC chairman Christopher Cox waxed enthusiastic in announcing the tool's debut. "Gone are the complicated data expeditions that forced investors to hunt through financial statements, footnotes, proxy statements and other disclosure to figure out how much a company pays its top executives," he said. "Through its new rules and the power of interactive data, the SEC has transformed the landscape of compensation disclosure."

Cox is clearly hoping that the success of the tool will entice more companies to participate in the Commission's XBRL voluntary filing program. Sixty-five corporations have submitted 293 filings in XBRL since the program was launched in 2005.

Gary Purnhagen, vice president of strategic planning with Merrill Corp., a provider of technology-based information management solutions, doesn't foresee any rush to sign up for the voluntary program. But he thinks Cox's move may pressure at least some companies to consider filing in XBRL. "If I'm an executive and users can do some of those [comparison] graphs and my numbers stick out like a sore thumb, then I might want to put the rest of my story up in XBRL to provide a more level playing field and better disclosure," he says.

The Executive Pay Finder is one more sign that Cox regards XBRL as a significant part of his legacy and one that should be firmly entrenched by the time he leaves office. Purnhagen is convinced Cox is laying the groundwork for a mandate. "Essentially he can say that this pilot program with 65 companies has been a successful one. He can point to the fact that many executives have said that this isn't all that expensive or difficult to do. He will point out that once you have a large database of information in XBRL, the value of that information will be far greater -- you'll be able to truly begin to take advantage of the technology."

An SEC advisory committee has already called on the Commission to consider requiring XBRL tags for facing financials for large accelerated filers for the fiscal year ending 2008, Purnhagen points out. Which would mean that 10ks due to be filed in February 2009 would need to be tagged in XBRL. "I think the challenge will come, particularly for large accelerated filers, who are going to need to get up to speed very quickly on this," he notes.

No question, such a move by the SEC would blindside many organizations. Awareness of XBRL remains surprisingly low among finance executives. For example, an October survey of CFOs in the manufacturing sector by Grant Thornton revealed that only about a half had any awareness of the technology. "To me, that's dereliction of duty," says Purnhagen. "You need to be aware of what's going on. People have their heads down and they're focused on what's in front of them -- but this is clearly coming."

You can access the Executive Pay Finder by going to
http://www.sec.gov/xbrl and clicking on the Executive Compensation link.