What is the Katie Couric Clause?

A Katie Couric clause was a proposed provision of SEC executive compensation disclosure rules that would have required public companies to disclose compensation paid to several non-executive employees whose total compensation exceeded that of the most highly paid executive officers.

How Does the Katie Couric Clause Work?

The Katie Couric clause is named after former 'Today Show' co-host Katie Couric, who, like many media personalities, receive high compensation but are not company officers. Media companies, for this reason, were particularly skeptical of the SEC's 2006 proposal because it would have required them to disclose the compensation packages of their big-ticket personalities.

The SEC did not finalize the rule.

Why Does the Katie Couric Clause Matter?

The idea behind the SEC's proposal was to get companies to acknowledge that the CEO and other executive officers aren't always the highest paid people in a company. In many companies, for example, salespeople who work on commission can easily out-earn salaried executives in a good year. However, because these salespeople are not officers of the company, their salaries are not disclosed and shareholders may not realize the dependency (or in some cases, liability) companies have to certain people.