From www.sec.gov (DeMarche Summary)

The Securities and Exchange Commission has amended the disclosure requirements for executive and director compensation, related person transactions, director independence and other corporate governance matters and security ownership of officers and directors. These amendments affect disclosure matters in proxy and information statements, periodic reports, current reports and other filings under the Securities Exchange Act of 1934 and to registration statements under the Exchange Act and the Securities Act of 1933.

The main impact of these amendments are to make proxy and registration statements and other reports easier to comprehend, while providing investors with a clearer and more comprehensive view of executive compensation policy through disclosure of methodologies used to select peer comparison companies.

The following excerpt from the new rule published in the Federal Register (Vol. 71, No. 74, pp. 53158 – 53266) is particularly salient for those companies that rely on peer groups as part of executive compensation philosophy:

“Whether the company engaged in any benchmarking of total compensation or any material element of compensation, identifying the benchmark and, if applicable, its components (including component companies)” (p. 53165).

For your convenience, the final rule effective December 15, 2006 can be downloaded directly by clicking the following link:

http://www.sec.gov/rules/final/2006/33-8732afr.pdf

Additional background information on the new SEC executive compensation disclosure rule can be found at:

http://www.sec.gov/rules/final.shtml

News on Peer Groups from the SEC

BusinessWeek: December 18, 2006:
EXECUTIVE PAY: It’s Full Disclosure Time
- Eamon Javers
“Companies are bracing for shareholder outrage in light of new SEC rules that require them to disclose top executives’ total compensation, including the value of pension plans, deferred compensation and perks.”
http://search.businessweek.com/Search?searchTerm=it%27s+full+disclosure+time

The New York Times: November 26, 2006
GILDED PAYCHECKS: Group Think; Peer Pressure: Inflating Executive Pay
- Gretchen Morgenson
“Like Lake Wobegon, Garrison Keillor’s fictitious Minnesota town where all the children are above average, executive compensation practices often assume that corporate managers are equally superlative. When shareholders question lush pay, they are invariably met with a laundry list of reasons that businesses use to justify such packages. Among the data, no item is more crucial than the “peer group,” a collection of companies that corporations measure themselves against when calculating compensation.”
http://select.nytimes.com/gst/abstract.html?res=FB0D10F8385A0C758EDDA80994DE404482

DeMarche Independent Peer Groups & Clones

Benchmarking means comparing one's self to other companies/stocks. DeMarche separates benchmarking companies from stock benchmarking. The important variables in this research stem from our Factor Model research, Independent Peer Groups & Clones, and our migration method.

Independent Peer Groups:
Markets change and companies change, so your peers and clones today may not be the same in a few years. Traditional approaches to peer group analysis rely heavily on industry. DeMarche Clone Analysis improves on this process by focusing on factors that are more reflective of a buy-side investment manager and your competitors for capital.

See a Sample of Clone Groups we provide