But now a late-December change in the regulations means those companies are going to have to redo a lot of work they had already completed.

The disclosure rules, which force companies to reveal their top five executives’ total compensation along with a detailed explanation of how those packages are determined, require HR executives, compensation consultants and boards of directors to spend numerous hours drafting new tables that lay out the information.

“This is a long process,” says Steve Van Putten, East region practice leader for executive compensation at Watson Wyatt Worldwide. “It takes several meetings just to explain all of the changes to the compensation committees.”

Given that, many firms were probably annoyed when late in the afternoon of December 22, the SEC announced a change in the rules. Rather than having companies disclose stock option values as they are granted, the revised rule requires firms to disclose options values as they vest.

Under the initial rules, for example, if an executive received $100,000 that vested over four years, the company would have to disclose the entire $100,000 in the summary compensation table. Now, they will report $25,000 every year for four years.

The SEC made the change last month to be more in line with accounting rules, which require companies to expense stock option grants in their financial statements as they vest, the agency said in a release.

Most companies are pleased with the rule change because it provides a more accurate picture of what they are actually paying out in a given year, consultants say. Even so, many are probably irritated at the timing of the announcement, says Mark Borges, a principal at Mercer Human Resource Consulting and a former SEC attorney.

“Unfortunately, a lot of companies have done a fair amount of work to comply with these regulations already,” he says. It could be particularly burdensome for companies whose fiscal year ended December 15, since their proxies, which will have to comply with the new rules, are scheduled to come out this spring.

Now those companies are going to have to calculate the fair value of rewards made not just in 2006, but in previous years as well, consultants say.

“For companies that made a lot of stock option awards over the past few years, this could be quite a bit of work,” Borges says.

Washington office of Gibson, Dunn & Crutcher.

As firms go back and redo the numbers, they will also have to draft lengthy footnotes explaining what the numbers mean, he says.

The way the SEC handled the rule change indicates that in the future it will try to keep its requirements in line with accounting rules. Companies should be prepared for that, consultants say.

“There are going to be more accounting changes in the future, and the SEC will probably adopt those changes too,” says Mark Reilly, a Chicago-based compensation consultant.

—Jessica Marquez