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Abstract
Despite the increased attention on executive compensation generally, little scholarship has focused on executive perquisites: benefits granted only to executives above and beyond their salary and untied to their job performance. Since 2006, the Securities and Exchange Commission (SEC) has refused to update its disclosure requirements. Current disclosure loopholes permit companies to obfuscate the actual compensation paid to their executives in controversial forms: nonbusiness related use of the corporate jet for executives and their families, personal entertainment, home security, and tax reimbursements for these perquisites—to name a few. The SEC has recently initiated numerous enforcement actions against companies that violate its existing disclosure rules. However, not a single company subject to an enforcement action received a penalty greater to, or even equal to, the value of the undisclosed perquisites. Moreover, the SEC failed to punish executives culpable in the companies’ nondisclosures sufficiently. Since shareholders have little recourse to hold companies accountable and the SEC refuses to apply consistent or sufficient penalties to prevent inaccurate disclosure, the SEC must, as an initial step, update its deficient disclosure rules for executive perquisites.