April 9, 2006
I have not read the entire 91-page PDF. I heard about this issue in the news and read part of the introduction in the PDF.
I would like to opine in favor of maximal disclosure. I think transparency is is good for the nation.
In fact, if you think about it, except perhaps for "trade secrets", there could be little economic harm if businesses were forced to share ALL of their information customer lists, the pay of every employee, etc. Such sharing would improve competition and hence make the economy more efficient. I'm not saying this should be added to the current proposal, it is just a thought experiment to show that, most likely, transparency is almost always good for the economy.
I have heard in the media that, "business groups are resisting a requirement to disclose pay for highly compensated nonexecutive employees". However, I can not locate the arguments in favor of less disclosure. I read through some of the other submitted comments, not all of them, and I did not happen to see any taking this point of view. All I could find was this bit in the NYTimes:
Mr. Lehner said the roundtable would propose dropping the requirement about disclosing the income of top employees who are not part of management but receive more compensation than company leaders because it would be both disruptive inside a company and could involve the disclosure of proprietary information.
(I did not see any comments by a Lehner or a Roundtable on the Submitted Comments page, so I was unable to read their views in more depth)
I don't see why disclosure of compensation would imply the disclosure of other "proprietary information", unless of course compensation itself is defined as "proprietary information" -- which is what we are debating, and hence using this as an argument would be circular reasoning.
It is true that the more people know about others' salaries, the more they will be able to accurately price their own worth --- however, this "disruption" could be usefully rephrased as "economic competition", and I think it would increase the efficiency of the economy a good thing, not a bad one. Another, unrelated example of "disruption" being good: business is "less disruptive" and more pleasant for management when you have a monopoly, yet competitive industries are better for the economy as a whole.
Since I am sure you have already thought through these issues I am sorry to spend your time with this letter, however I thought it might be nice to have one more letter supporting the proposed changes.
On a different, but related issue, I would also like to concur with The Economist's article, "Ownership matters Shareholder democracy" if one goal is to allow shareholders to force executive pay to more closely track executive performance, then transparency must be coupled with a dramatic empowerment of shareholders. First, direct shareholder resolutions about executive pay should be enforcable second, elections to the board should be done by majority vote votes opposed to a candidate should be counted. As a shareholder, it seems to me curious that these "dramatic changes" are not already the status quo we own the company, after all, and we would like to be permitted to govern it, when we choose to.
The Economist article states that there was in fact an effort to empower shareholders last year but that it was killed by "lobbying by bosses". I regret that I did not hear of the proposal and have a chance to leave a comment. I encourage the SEC to continue to float proposals to empower shareholders.
thank you for your efforts,
p.s. Your website is easy to use I had no trouble finding the section for submitting comments on proposed rulemaking.