The signature feature of the SEC’s newest rules, effective Dec. 15, is that companies must add up all compensation in a single figure, which facilitates easy comparisons across time and companies. To derive a total-compensation number, the SEC made difficult and controversial assumptions about the present value of stock options, deferred compensation, and other uncertain future income streams. But the effort was widely defended because the health of financial markets depends on such transparency.
Similarly, the efficient operation of public school systems requires that the public understand how its money is being spent. Surprisingly, however, public school systems have far lower standards of transparency for executive compensation than public companies’.