Delta Air Lines announced a new pay package on Tuesday that would grant $480 million in employee pay and benefits while putting the CEOs pay and benefits on hold as the carrier plans to emerge from bankruptcy late next month. The new employee compensation plan calls for a cash lump sum payment of 8 percent of last year's salary, stock awards, incentive performance awards, profit sharing, pay raises of 4 percent, and 401k contributions. CEO Gerald Grinstein said, "We want to get them as fast as we can up to an industry average. [The executives'] basic salary part of their compensation is not going to go up until everyone else in the company is up to the industry average."

The plan has many employees satisfied while Grinstein commented that while the pay has been lousy for executives (comparitively), the rewards have been great with the greatest reward being the opportunity to work with employees to rebuild the company. And with the end of bankruptcy in sight, it could mean a nice payday for everyone involved!

Goldman Sachs Group Inc. (NYSE:GS) said Monday that it was named as a defendant in a shareholder lawsuit challenging the way the firm accounts for employee options. The plaintiffs contend that the company's proxy statement undervalues stock option awards while the company's senior management received excessive compensation. Specifically, the shareholders claim that the company issued excessive compensation (constituting corporate waste) due to the company not following the proper methodologies when calculating compensation. The lawsuit names the company's board of directors, executive officers, and members of its management as defendants seeking an injunction against the March 27th annual shareholders meeting and the voiding of any election of directors in the absence of an injunction. This is one of the first lawsuits of its kind since the new executive compensation rules took place, so it will be interesting to see if it goes anywhere or is simply dropped by the courts.

The new executive compensation disclosure rules are causing confusion among some investors who are finding executives with negative comensation amounts. Recently, Brookfield Homes Corp () CEO Ian Cockwell earned a negative $2.3 million according to a recent SEC filing by the company. In reality, Mr. Cockwell did not work for free in 2006, nor did he pay his employer with his personal funds. Rather, this negative number stems from a new method for measuring the value of deferred share units and stock options. The new rule states that companies must now disclose the value of these securities based on the same accounting standards used in financial statements; this values them at the end of the fiscal year instead of on the date they are granted. Moreover, companies are now only required to disclose the value of the portion of options that vesnted in any year rather than the value of the total amount granted.

Many investors say that the new disclosure is too complicated for the average investor to understand. However, many experts argue that it has always been this complicated, the complexity is just being realized now that the disclosures are a lot less vague. The key to accurately understanding these disclosures is to read through the entire CD&A section, not just the summary tables, as these can be highly misleading.

Citigroup's (NYSE:C) chairman and chief executive, Charles O. Price, took home $25.98 million in 2006 despite lackluster stock performance which fell short of many of its peers in 2006, according to the compensation committe of the companys' board. The executive's salary consisted of a $1 million base salary along with a $13.2 million cash bonus, an increase of about 13% over 2005. Many investors expressed concern that the compensation committee utilized too many vague and intangible metrics when computing pay while failing to include the most important - operating expense control. Meanwhile, Citigroup also reported that Gary Crittenden, its new CFO, would receive a pay package worth up to $10 million in 2007.

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Last week SEC Chairman Cox said during a speech that some explanations of executive compensation were excessively long and "overlawyered". Many lawyers, however, that have put in long hours writing these new required "compensation discussion and analysis" sections took offense. They counter that the SEC's stringent requirements make it essential for companies to put ALL compensation data out there, no matter how many pages. While this may complicate things for the average investor, lawyers see it as a necessity in order to avoid being sued by the SEC or the plaintiffs' bar is any minor detail is omitted. So, where is the middle ground? Well, that remains to be seen. For now, investors will just have to learn to forge through the occasional 30-60 page proxy containing executive compensation documentation in order to find what it is that they really want.

SEC Chairman Cox gave an address to the 2007 Corporate Counsel Institute yesterday in which is outlined future changes and commentary on current SEC regulations. In particular, he focused on changes to the executive compensation disclosure rules. One of the primary goals of the new regulations was to prevent the "boilerplate" disclosures that have previously been the norm, and instead replace them with genuinely useful information about executive compensation. Here's where he noticed the problems...

"We're seeing examples of overlawyering that are leading to 30- and 40-page long executive compensation sections in proxy statements. We’re seeing companies including columns in the summary compensation tables even when there's nothing to report in those columns. This kind of slavish adherence to boilerplate disclosure is what we're trying to stamp out," said SEC Chairman Cox. "So while we're giving people some grace in getting used to the new rules, the plain English part of executive compensation will be increasingly strictly enforced in the coming year."

He then summarized, "Before I leave the topic of executive compensation, let me offer a word about the new Compensation Discussion and Analysis section. This new opportunity for a company to detail the objectives of its compensation program is what good disclosure is all about — and it's where inside counsel can play a vital role. The narrative in the CD&A should provide a qualitative look at the company's executive compensation policies, and shed light on the quantitative tabular data. This is your chance to plainly tell the company's compensation story. I urge you to take the opportunity and make the most of it."

Northwest Airlines (OTC:NWACQ) faced some sharp criticism Wednesday from the head of the pilots union, Dave Stevens, blasted company executives for taking excessive compensation, while the airline's projected profitability was largely achieved through deep employee pay cuts. "The pilots gave concessions to save Northwest Airlines, not to enrich the Northwest executives," said Mr. Stevens. "Management used an overly pessimistic plan to extract concessions." But just how much did they receive? Well, we'll know for sure before the company exits Chapter 11, because they will be required to disclose its management compensation plan. Mr. Steenland, CEO, said in a recent interview that top executives will receive equity in the restructured airline, while Stevens said he has resisted his efforts to grant stock or options to "front-line" employees who run the day-to-day operations.

The new SEC compensation rules state that companies have to now be clearer with where their money is administered, even if it involves benefit packages for their CEO’s. In short, shareholders want to know what the executives are making and spending – even if it involves their golf outings.

As for shareholders, they have a right to know what the CEO’s are spending their benefit packages on. Such packages may include golf club memberships, life insurance benefits, automobile and parking allowances, personal security, Internet allowances, and personal trips with the use of the corporate jet. Shareholders do spend a pretty penny on the leaders of their shares and companies. For example, Starbucks shareholders spent $1.23 million on perks last year. Perks for overall top US corporations are covered by a few good hundred thousand dollars per executive per year.

As if this wasn't enough, many companies actually provide extra money or a "gross up" benefit to cover the taxes associated with the perks. The issue arises when the shareholders and general public are unhappy with how much CEO’s are receiving yearly in perks and bonuses. However, the board members are the ones in control of the financial outcome of the perks and benefits for their CEO’s – they are approving such benefit packages. Traditionally, Boards have just approved these benefits under the table, but now that they are more apparent in filings, they may face increased investor scrutiny.