February 28, 2017
The American people support public companies because of the many positive contributions they make. But sometimes that support is taken for granted. One way this support has been exploited is that public companies have been allocating ever more company resources to benefit managers personally. Although excellent managers who improve society deserve excellent pay, we know that too often, that is not what's happening, and that managers are being compensated to a high degree of excess, while society, including shareholders, get little or nothing in return. This happens because of asymmetric information, rent-seeking behavior, exploitation of conflicts of interest, and other phenomena that contradict market principles.
All this rule seeks to do is to help the market and the public better assess these phenomena. It is of huge importance to our country--the ever widening gap between manager and worker compensation has contributed to widespread public mistrust of a swath of American institutions. The government is perceived as serving only the elite, managerial class whose high compensation is seen as evidence of governmental favoritism. Should the SEC now choose to avoid implementing this rule, that will be taken as further evidence of such favoritism.
The American people deserve to know that that is not the case. The SEC can help by implementing this rule.