July 26, 2006
I have heard you are holding hearings on proposals for disclosure of executive commpensation. I am disappointed that your proposals do not include regulations allowing shareholders to approve or disapprove executive compensation.
Simply disclosing executive compensation can have unintended effects. Executives can see what other executives are being paid. With back dating and repricing of options and their prosecution, there will be fewer executives available and executives will be able to start demanding higher compensation. In order to check this the shareholders must have final say over how executives are compensated.
It is my view that disclosure alone, under current conditions, will only make the problem worse. The shareholders must have more control over the companies they invest in. Not to allow this now will only make it more necessary in the future. Shareholder rights in this matter must be addressed now to head off a greater problem later.
Sincerely,
Scott H. Suss