Subject: File No. S7-03-06
From: Howard R Green, Esq.
Affiliation: Hawaii Bar Association CEO North Shore Marketplace

April 10, 2006

I am writing as the owner of a company and also as an investor and trustee who is responsible for investing funds of others. Portfolios I own or manage total about $10 million.
Excecutive compensation and responsibility are key areas in which corporate america has gone seriously awry. In the executive and director suites it feels as though you are the ones making the decisions that lead to greater company profitability. That's true. But the senior executives and directors totally forget the contributions made by the mass of employees working for the company, and the investors.
Because they can stack boards of directors with other senior management of like mind, or those who run other businesses who share the same point of view, it seems that everyone making excecutive pay decisions are of like mind. Given the ability a CEO has to manipulate the decision making and the skewed decision making environement, it cannot in any real sense be said that fair market forces are at work in this process.
They are also in a position to hire company accountants and lawyers to parse phrases so that their compensation never makes it onto the company books as an expense.
Moreover, when executive compensation is approved, there is never a disclosure of what the impact on future earnings might be.
And there is never disclosure of scenarios including dollar costs of what will occur if the executive is terminated for failure to perform, or quits at various different stages.
Another major problem is that executives arrange various corporate changes like spinoffs and sales of businesses and mergers, mainly for the benefit of the executive compensation that arises from these transactions. And there is rarely any disclosure of what the corporate compensation impact of such transactions might me at the time shareholders are asked to approve of them.
This disclosure is needed, not just so shareholders can evaluate the financial impact, but so that they can also understand the motivations that might be driving the executives who are planning the transactions.
In fact I think it could be said that, whereas compensation impact is nearly the first thing any CEO considers when he evaluates a transaction, it is also the last thing that is disclosed.
I have watched many good men attempt to build businesses and it takes nearly a lifetime to build businesses that support incomes in the six figures.
So when I watch corporate executives manipulate the system to provide huge seven, eight and nine figure incomes to themselves in businesses that have really been built over time by others, it makes me realize that the individuals involved have an exaggerated opinion of their value, and have little regard for the years of patient investing and working by the employees that have put the company into the position to take advantage of the opportunities that exist before the executive ever arrives on the scene. In fact it's clear that in some cases the just are are put in a position to take, so they take.

I very much want to commend the SEC for starting to approach this problem. I hope you will use your full power to make your regulations as strong and as sweeping as the law allows. I think the future of corporate america hangs in the balance.
Thank you for your consideration.
Howard R. Green, Esq.