Subject: File No. S7-03-06
From: Jim Markey

March 16, 2006

March 16, 2006

Ms. Nancy M. Morris
Securities and Exchange Commission
100 F. Street NE
Washington, D.C, 20549-9303

Re: Comments on Proposed Rule for Executive Compensation and Related Party Disclosure---File No. S7-03-06

Dear Ms. Morris:

I am Vice President and Chief Counsel-Securities and International of Kellogg Company, and appreciate the opportunity to provide the following comments on this proposed rule.

1. We would suggest that the new Compensation Discussion and Analysis (CDA) section be furnished to the Securities and Exchange Commission, rather than filed with the Securities and Exchange Commission, much like the Report of the Audit Committee in proxy statements. As proposed, the CEO, CFO and all the other employees of Kellogg Company would have to attest to the veracity of the CDA section. It is not appropriate for employees of Kellogg Company to have to attest to the accuracy of report that primarily involves the deliberations of an independent committee of the board of directors. Instead, we would suggest that each member of the Compensation Committee sign the SDA section in a document to be retained by Kellogg Company, and that the members of the Compensation Committee endorse the CDA section in the proxy statement by having their names be placed at the end of that section (similar to what is currently required by the Compensation Committee Report and Audit Committee Report).

2. Companies are often restricted or prohibited by collective bargaining agreements and/or the laws of particular countries in which they operate from providing certain benefits to employees (Restricted Employees). Usually, these benefits are generally made available on a non-discriminatory basis all employees other than Restricted Employees. Under the proposed definition, these benefits would be considered perquisites or other personal benefits, if received by executive officers, because Restricted Employees would not receive similar benefits. Therefore, we would recommend that the proposed definition be amended to provide that items not be considered perquisites or personal benefits if they are generally made available on a non-discriminatory basis to all salaried employees in the particular country in which the principal executive officer and principal financial officer are employed.

An example of one such benefit is a discounted employee stock plan under Section 423 of the Internal Revenue Code, which companies might decide to offer just in the U.S. because of the securities law requirements in other countries. Additionally, the offering of this benefit to union employees would probably be a subject of mandatory bargaining, meaning that the company might ultimately not be able to offer this benefit to union employees.

3. We would recommend that companies not be required to quantify the amount of tax gross-up payments in post-employment circumstances, but only describe in narrative form the payment to be made. Even though the proposed rules allow companies to make reasonable assumptions and estimates, showing a number for a tax gross-up payment will be of little value—and ultimately confusing--to stockholders because of the number of variables involved in making the calculation. In addition, making such a calculation would require the company to engage special resources to assist with just this calculation (such as accountants, actuaries and tax advisors). We believe the costs to the company and its stockholders outweigh any benefits the calculation may provide stockholders.

4. Kellogg Company has adopted several multi-year performance share and performance unit plans which are settled in shares of Kellogg Companys stock and which have a performance measure which is not based on the price of Kellogg Companys stock. It would seem that those plans would be a non-stock incentive plan under the term as currently defined, as they are incentive plans where the relevant performance measure is not based on the price of Kellogg Companys equity securities. This would result in double counting, as it would mean that the grant of the awards under those plans would be captured as a stock award in the Summary Compensation Table in the year granted and the dollar value of the payment of those awards would again be captured as non-stock inventive plan compensation in the Summary Compensation Table in the year the performance measure is satisfied. We also are aware of a situation at another company where one portion of the award is based on stock appreciation and the other portion is based on a non-stock price performance measure. For those reasons, we would suggest defining a non-stock incentive plan as an inventive plan where the relevant performance measure is not based on the price of the registrants equity securities and the award does not permit settlement by issuance of the registrants equity securities.

5. Finally, we would recommend that the SEC eliminate the proposed requirement to disclose the total compensation and job description for up to three employees who were not executive officers if their total compensation for the last fiscal year exceeded any named executive officers total compensation. First, the proposed requirement would impose a significant burden and cost on companies (like Kellogg Company) to have to track the compensation of tens of thousands of employees across several countries just for purposes of the proxy statement. Second, these employees would not have a policy-making function for Kellogg Company, and therefore, the compensation paid to such employees is likely not material to the company or a reasonable investor. Third, even though companies are not required to disclose the employees names, the disclosure of their job descriptions will normally make it easy for other employees and competitors to identify these employees anyways. Employee compensation information is very sensitive and the disclosure of the total compensation paid to a non-executive employee, such as a salesperson, could cause employee morale issues and provide our competitors with sensitive information that could be used to solicit the employment of our salespeople at the expense of Kellogg Company and its shareholders.

I thank you again for giving me the opportunity to comment on the proposed rule and please feel free to email me or call me at 269-961-3416 if you have any questions or concerns.


/s/ Jim Markey

Jim Markey
Vice President and Chief Counsel--Securities and International
Kellogg Company