ConAgra Foods agreed to pay $45 million in fines today to settle SEC fraud charges and improper accounting practices. The SEC discovered that the company had substantially distorted its financial statements between 1999 and 2000 while making numerous tax errors from 2002 to 2005. Interestingly, had the accounting been done properly, the company would have missed Wall Street estimates for 11 fiscal quarters between 1999 and 2002.

"The facts here are particularly troubling because of the number of different improprieties engaged in by ConAgra, the length of time over which they occurred, and the fact that senior management was involved in the misconduct," SEC Enforcement Director Linda Thomsen said in a statement.

The $45 million in fines will be put in a fund that will be dispursed to affected shareholders.

New regulations on executive compensation are exposing just how much many executives are receiving in retirement benefits - a major component of their pay packages. Just how large are these retirement benefits? Well, former Gannett chairman Douglas McCorkindale who retired last year with a $25 million retirement package in addition to his $21.1 million in deferred compensation. Interestingly, all but $1.7 million of this retirement income was derived from a special executive compensation plan that doesn't apply to normal employees.

The trend is only on the increase too. Executives of the Fortune 1000 companies offering supplemental executive retirement plans stands at about 69% of companies. Meanwhile, non-qualified deferred compensation plans are distributed amongst about 90% of Fortune 1000 companies. These numbers compare to just 21% of private sector employees covered by defined-benefit retirement plans and 42% covered by 401(k) plans. Clearly, there is a disconnect between executives and employees when it comes to retirement plans...

Regulators have been waiting years to revamp the infamous Section 162(m) of the IRS code - a portion originally designed to rein in executive compensation that inadvertently led to even greater pay. Recently the IRS may have given them that chance by ruling that compensation for CFOs is no longer covered under the section, which essentially allows them to decide on any pay they wish without worrying about tax consequences.

Why is this a good thing? Well, the move will likely force lawmakers in Washington to take a second look at the issue and finally revamp the ancient rule - just as many candidates are focusing on excess executive compensation. Treating a CFO differently is simply a ruling that cannot stand; and while lawmakers could simply make a quick technical change, it is likely that at least two key lawmakers will want much larger changes to the rule. Barney Frank and Charles Grassley are two lawmakers that have been waiting for an opportunity like this for some time. Whether or not they take action remains to be seen; however, we could soon see new tax law that may finally effectively rein in excessive executive compensation.

Capital One CEO, Richard Fairbank, is one executive that hasn't taken a salary but maintained a nice paycheck in the form of stock options. The executive has booked around $29.3 million in compensation by selling approximately 470,000 stock options from the beginning of May through last Friday. The options carried strike prices set at $16.75 which gives him great incentive to increase the company's stock price while securing a salary - as the current share price stands at just over $75/share. However, many investors remained concerned, especially given the company's recent 24% drop in quarterly earnings and struggling subprime mortgages division. Moreover, the company announced last week that it would cut around 2,000 jobs in order to reduce expenses and boost its earnings. Management contends that many of these problems could be short-term and were somewhat unavoidable (given the sudden collapse of the subprime market).

A new study conducted by the Institute for Operations Research and the Management Sciences (INFORMS) found that employee stock option plans (ESOPs) offered to executives as part of their compensation package could significantly increase the risk of fraud in the form of rigged share prices. The study's authors said, "Our results demonstrate two factors substantially increase the likelihood of financial misrepresentation: extremely low performance relative to average performance in the firm's industry, and high percentages of CEO compensation in stock options." Interestingly, the authors found that bonuses did not have the adverse affect of stock options.

These days there is great incentive for performance-based compensation as it is supposed to motivate executives to boost performance. Many of the tax laws and new disclosure laws clearly favor these types of performance-based compensation. However, it appears as if stock options may now be a double-edged sword - the SEC must identify new ways to discourage aggressive, unethical or illegal behaviors.

Executive compensation has been a hot-button issue this year after Home Depot and Pfizer CEOs left their companies with multi-million dollar golden parachutes amid declining stock prices. Despite this spotlight, however, little has actually been accomplished in the way of curbing executive compensation. Shareholder proposals during the last proxy seasons were marginal at best, with only three major companies adopting the nonbinding shareholder vote on executive pay. The majority of the proposals were shot down by majority holders that included larger institutions and mutual funds. Meanwhile, the actual numbers continue to astound as CEOs stand to make 179 times what the average worker makes and around 2.5 times as much as the average executive at their company. So, what can be done to reign in these figures? Well, without at least a nonbinding vote it may take more instances like Home Depot and Pfizer to finally convince institutional investors that there is a problem.

Warren Buffet slammed the tax differential between the rich and poor yesterday during his charity benefit for Hilary Clinton. Buffett cited himself, the third-richest person in the world, as an example. Last year, he was taxed at 17.7 percent on his taxable income of more than $46 million. Meanwhile, his receptionist was taxed at about 30 percent! Buffett said that this was despite the fact that he was not trying to avoid paying higher taxes - that is, he doesn't use tax shelters. He then challenged Congress and his audience to see what the people who "clean our offices" are taxed and compare that to the rich in America - it's simply not a fair system. This is just another example of the despairity between the rich and poor, whether it be in terms of executive compensation granted by corporations or taxes levied by the government

Government regulators have recently announced a new bill that would tax private equity firms' profits as ordinary income instead of capital gains income. For years, private equity firms like Blackstone have invested their clients' money and had the proceeds taxed at the capital gains rate of 15% instead of the corporate tax rate of as high as 40%. Now regulators are arguing that the fees these private equity firms collect (usually a portion of their returns) should be taxed at the corporate tax rate as ordinary income instead of the lower capital gains tax rate. This income is known as carried interest. Government officials argue that if you invest other people's money and make a profit, then that profit should be taxed as ordinary income - it's as simple as that.