Thursday, February 09, 2006

Deferred Gratification

What’s in a footnote? An awful lot, if the footnote happens to be under the summary compensation table in Analog Devices, Inc.’s proxy statement. Analog’s comp table tells us that President/CEO Jerald Fishman earned a modest $930,935 in salary, $414,445 in bonus, and about $1 million in “other annual compensation.” But check out the footnote to that last figure. Woohoo! Mr. Fishman also got another little tidbit this fiscal year: over $8.5 million in interest on his deferred compensation account.

What’s going on here? Well, the company would no doubt point to the SEC rules for summary comp disclosure, which say the table only has to include interest on deferred comp that's earned at an “above-market” rate, defined arbitrarily as more than 20% over a standard government interest rate. But the rules also say compensation disclosure must be “clear, concise and understandable.” If you wanted to be clear, you wouldn't relegate to a footnote an amount 3-1/2 times what’s disclosed in the table.

If you're curious how much deferred comp one has to stash away to earn that much interest, Mr. Fishman had almost $145 million in his account as of last October. He withdrew it all in December. Must have been a happy holiday in Fishmanland.