April 6, 2005
Securities and Exchange Commission
Dear Securities and Exchange Commission,
I am writing to urge the SECommission to act on its proposed rule on executive compensation disclosure. Too often executives are richly rewarded even when their companies' performance is below par. Without better disclosure, shareholders, employees and the general public cannot evaluate whether executive pay packages are unjustly enriching executives at shareholder cost or providing fair compensation.
The newly proposed rules will make this crucial information more accessible to shareholders and the public. The new requirements to disclose total compensation figures, 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 potential conflicts of interest, no matter what the amount.
I also urge the SEC to require that companies disclose pay-for-performance data. In order for investors to understand how pay and performance match up, 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.
AS A CORPORATE EMPLOYEE, I WOULD LIKE TO SEE -- IN ADDITION TO ACCURATE COMPENSATION DISCLOSURE -- THE IMPLEMENTATION OF SEVERAL COMMON-SENSE POLICIES INTO LAW. FOR EXAMPLE:
* NO PRESIDENT/CEO/SR. MANAGEMENT BONUSES IN ANY YEAR THAT SEES NO EMPLOYEE BONUSES.
* NO PRESIDENT/CEO/SENIOR MANAGEMENT BONUSES IN ANY YEAR OF PERSONNEL DOWNSIZING.
* SENIOR MANAGEMENT AND ABOVE SHOULD HAVE THE INDENTICAL HEALTH INSURANCE OPTIONS AS OTHER EMPLOYEES.
* IF PENSION-FUNDING, PROFIT-SHARING, OR OTHER BENEFIT IS REDUCED OR ELIMINATED FOR EMPLOYEES, THEN IT SHOULD BE LIKEWISE REDUCED OR ELIMINATED FOR THE CEO/PRESIDENT/SENIOR MANAGEMENT.
IN MY FEW YEARS AS A CORPORATE MANAGER, I'VE SEEN FAR TOO MANY INTELLIGENT, COMPETENT, HARDWORKING, HIGHLY EDUCATED COLLEAGUES LAID OFF FROM THEIR JOBS, WHILE THEIR SUPERIORS (QUITE THE MISNOMER) SKIM EVER-INCREASING PERSONAL WEALTH FROM THE SAME ENTITY THAT SUPPOSEDLY CANNOT SUSTAIN THE SALARIES OF THE EMPLOYEES WHO HELPED CREATE THAT WEALTH.