April 6, 2005
Securities and Exchange Commission
Dear Securities and Exchange Commission,
Please take positive action on your proposed rulemaking on executive compensation disclosure. Too often executives are generously rewarded even when their companies perform poorly.
Shareholders and the public deserve full disclosure in plain English so we can evaluate whether executive pay packages are fair.
The proposed rules will make this critical information more accessible to shareholders and the public. The new requirements to disclose total compensation figures, including stock options, pensions and detailed compensation breakdowns will make it clear exactly how much top executives are earning and why.
I believe that CEO pay should be set by independent directors. Under the proposed rule, a director could secretly do $120,000 in business with a company, an amount that is more than four times the average worker's annual pay of $27,460. Shareholders should be told if directors have any potential conflicts of interest.
I also urge the SEC to require that companies disclose pay-for-performance data. In order for investors to understand whether pay reflects performance, companies need to explain more clearly what level of performance is necessary for a particular level of pay. I urge the SEC to require companies to disclose both the performance criteria and the performance targets they use when setting executive pay.
Mary von Euler