Briefly Noted

    The Inside Scoop: Where to Get Info on Executive Compensation

    Corporate accountability is at the top of the list of attributes investors today are favoring. And executive compensation is a prime area of focus.

    Where can you find information on executive compensation?

    The federal securities laws require clear and concise disclosure about compensation paid to CEOs and certain other high-ranking executive officers of public companies. Several types of SEC filings include information on executive pay: (1) the company’s annual proxy statement; (2) the company’s annual report on Form 10-K; and (3) registration statements filed by the company to register securities for sale to the public.

    The easiest place to look up information on executive pay is the annual proxy statement. This statement includes the Summary Compensation Table, which provides, in a single location, a comprehensive overview of a company’s executive pay practices. It sets out the actual compensation paid to the company’s chief executive officer and four other most highly compensated executive officers for the past three fiscal years. It is followed by other tables and disclosure containing more specific information on the components of compensation for the last completed fiscal year. This disclosure includes, among other things, information about grants of stock options and stock appreciation rights; long-term incentive plan awards; pension plans; and employment contracts and related arrangements.

    If you are a shareholder of the company, the company is required to send you a copy of its annual proxy statement prior to its annual meeting of shareholders each year. A company also is required to file its annual proxy statement with the SEC no later than the date proxy materials are first sent or given to shareholders. These are then available on the SEC’s EDGAR database through its Web site (

    Of Interest: When Bond Payments Are Late

    When investment problems arise, investors typically turn to securities regulators for help. But if your problem concerns interest payments on your bonds, where do you turn?

    The process for paying bondholders ordinarily involves banking transactions that are subject to the supervision of state and federal banking authorities. The way the process is supposed to unfold is that the bond issuer pays interest to the trustee named in the bond agreement. The trustee then transfers the money to the paying agent, who in turn makes interest payments to bondholders. Usually, the trustee and paying agent are the same banking institution.

    If you’re experiencing difficulty receiving your interest, here’s what you can do:

    • Contact the trustee and ask whether the issuer has, in fact, made the payments due and what steps the trustee is taking to protect bondholders.

    • Contact the paying agent for an explanation if the paying agent is separate from the trustee and both the issuer and trustee have made their payments on time. If you are not satisfied with the explanation, contact the state banking regulator of the state where the paying agent is chartered and operates or report the delay to the federal bank regulatory agency that supervises the paying agent bank.

    • Contact the issuer to determine whether the trustee/paying agent that appears on the face of the bond has changed because of a merger or other circumstances.

    • If you hold a bond in book-entry form and are having payment problems, you may need to contact the securities firm, bank, or other participant that maintains your ownership position.

    Stock Investors' 12 Most Common Mistakes

    By repeatedly committing one or several common investment mistakes, individual investors often prove to be their own worst enemy. Recently, CFA Institute, which administers the Chartered Financial Analyst (CFA) program, asked selected members to share their perspectives on some of the most common and costly mistakes made by individual investors.

    Among the most common mistakes:

    1. No investment strategy: A well-planned strategy takes into account several important factors including time horizon, tolerance for risk, amount of investable assets and planned future contributions.

    2. Investing in individual stocks instead of in a diversified portfolio of securities: Failing to diversify leaves individuals vulnerable to fluctuations in a particular security or sector.

    3. Investing in stocks instead of in companies: Analyze the fundamentals of the company and industry, not day-to-day shifts in stock price.

    4. Buying high: Investors at risk for “buying high” are those who follow investment fads, buying the “popular” stocks of the day, which are often at the height of their cycle.

    5. Selling low: Many investors are reluctant to sell a stock until they recoup their losses, because their ego refuses to acknowledge a mistake of buying an investment at a high price.

    6. Churning investments: Too-frequent trading cuts into investment returns more than anything else.

    7. Acting on tips and soundbites: Seasoned investors gather information from several independent sources and conduct their own proprietary research and analysis before making an investment decision.

    8. Paying too much in fees and commissions.

    9. Decision-making by tax avoidance: While individuals should be aware of the tax implications of their actions, the first objective should always be to make the fundamentally sound investment decision.

    10. Unrealistic expectations: Comparing the performance of your portfolio with relevant benchmark indexes can help an individual develop realistic expectations.

    11. Neglect: Investors should continue investing in every market environment, albeit through different investment vehicles, and establish a mechanism to make regular contributions to their portfolios. Investors should also regularly review their holdings to ensure they are adhering to their overall strategy.

    12. Not knowing your real tolerance for risk: Don’t wait until a sudden or near-term drop in the value of your assets to conduct an evaluation of your level of tolerance for risk.