CandleFocus

Katie Couric Clause

Candlefocus Editor
The Katie Couric Clause, or Katie Couric Rule, was a proposal to the U.S. Securities and Exchange Commission (SEC) in 2006 to amend their rules on executive compensation disclosure. The proposed rule would have required publicly-traded companies to reveal pay information on up to three of their highest-compensated employees beyond just the CEO and executive suite. 2This was thought to have been sparked primarily by the large and growing paychecks of highly successful news personalities such as Couric, then the highest-paid newscaster at CBS. The proposed rule likely would have meant that the public would know Couric’s salary if it had been passed. The proposed rule was met with lukewarm reception from major media companies, Wall Street firms, and government agencies.

Political and economic concerns weighed heavily in the decision to not adopt the proposed rule. Large media organizations were wary of what the disclosure of pay information for their news stars could do to their bottom line, and on the flip side, organizations on Wall Street were worried that revealing details of their executive compensation packages could give competitors valuable clues into their own business strategies and operations. The SEC ultimately decided not to adopt the Katie Couric Clause or similar rules aimed at providing more transparency on executive compensation.

However, this decision did not prelude SEC rulemaking around executive compensation. In 2010, the SEC adopted the Dodd-Frank Wall Street Reform and Consumer Protection Act, which included tougher rules around disclosing executive compensation. Under this act, companies are now required to report the amount and type of executive compensation that executives and other top employees receive. This includes salary, bonuses, stock options, and other forms of compensation. These regulations provide a much better understanding of executive compensation, giving investors a better view on how their investments are performing and allowing employees to compare their salaries to their peers.

In conclusion, the Katie Couric Clause was a proposed SEC rule that had its merits, but ultimately the SEC decided against it. Despite its rejection, its concept lives on in the form of Dodd-Frank and other regulations that provide investors and employees with a greater transparency into executive compensation.

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