April 7, 2005
Securities and Exchange Commission
Dear Securities and Exchange Commission,
I am an autoworker,.. a UAW member for more than 36 years. These most recent months have berated the American automobile industry, and it's employees in a most relentless way!
CEO's and top ranking executives salaries and other forms of compensation are exponentially out of control in America,... yet it is MY wages and benefits that are making the front pages every day.
The most basic of rules we were taught in High School economics seemingly do not apply (nor appeal) to those of the Fortune 500 companies top honchos. American heads of the corporations compensations are hundreds of times greater than that of those running the businesses in other leading nations.
I remember being taught the basic rule of economics,... supply and demand. American autoworkers are a part of that concept, where a high demand for a product renders itself back to the employees a share in the booty. Clearly, America is (and has been) in love with the Automobile, and the demand for them is one of the biggest reasons supporting the higher wages autoworkers have enjoyed. By virtue they are members of unions, they have successfully negotiated increases in wages and benefits, among other important benefits, over the last three or four decades.
Due to a significant lack in investigation (and just plain caring for it) for many years automobile dealers in the U.S. have enthusiastically encouraged customers to buy foreign made products (because they make more money on each sale doing it) than they do domestic brands.
Somewhere between executives pay running away like a train, car dealers pushing Toyota's, and the basic rules of economics going awry, we have arrived at a need for a solution.
We are writing to urge the Securities and Exchange Commission to act on its proposed rule making on executive compensation disclosure. It should be reported to the public at large via media every quarter, and every year, the same way mine are. 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.
We believe it may be a good idea CEO earnings (all forms)should be set by independent directors. 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. 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.
I recommend the SEC not only require the disclosures, but also publish them as much, and as frequently as the media do the details of my compensation and benefits.
R. Karl Burnett