April 10, 2006
Comments on File No. S7-03-06 -- Executive Compensation and Related Party Disclosure
I am writing to comment on the proposed rule changes for executive compensation disclosure. Please include these comments in the hearing record.
I support in the intent of the proposed rules in that they should lead to more complete and detailed disclosure of executive compensation. The proposed tabular reporting forms should be adopted, as they provide a format that should make it easier to understand the annual compensation and retirement benefits for these individuals. Comments on some specific items follow.
I urge that all components of executive compensation (salary, bonus, stock and stock options, deferred benefits, executive perks) be reported without any minimum threshold value, and that the reports be for the last three fiscal years, as is now required. And, retirement benefits, both compensation and the value of other items (e.g., club memberships, use of company facilities and planes, autos) should be provided in a clearly presented tabular form as shown in the draft of the proposed rule.
All compensation (present and deferred) for directors should be reported, and all contracts and business activities between the company and the director or the employer of the director should be disclosed, without any minimum threshold value.
The members of the company compensation committee should truly be independent directors. The SEC should prohibit directors from membership on a company compensation committee if the director has any ongoing relationship with a member of the executive staff, whether through a business contract between the company and the director or the directors employer, or some other relationship such as joint membership on a board of directors of a third company.
Many companies today use compensation consultants for guidance or justification of the compensation ultimately provided. The SEC should require that the company disclose all business relationships with these compensation consultants, the same as is required for the auditing firm.
Thank you for considering these comments.