Subject: File No. S7-03-06
From: William J. Heisler, Ph.D.
Affiliation: Assoc. Professor of Human Resources Management

April 9, 2006

I am pleased to submit these comments on the proposed rule changes for executive compensation based on my experience as a former director of corporate compensation of a NYSE-listed firm and as an educator in the field of human resources management.

Compensation Discussion and Analysis Section. I support the tabular changes stated in the proposal. I believe they will provide a more open view of total executive compensation. However, I am concerned about the proposal to replace the Compensation Committee Report with a narrative disclosure provided by the company. Many parties have been working to strengthen the oversight of executive compensation provided by the Compensation Committee. It is my concern that if this reporting responsibility is removed in lieu of a company disclosure, the Compensation Committee may feel less responsibility to exercise oversight. Also, unless the content of the narrative disclosure has a high level of specificity, the resultant disclosure is likely to be less forthcoming and insightful than the current Compensation Committee report. I recognize the value of having the company narrative accorded "filed" status, but I am uncertain if that will lead to more detailed discussion and disclosure.
If possible, at least have the Compensation Committee attest to their review of and agreement with the filed company narrative. If the Compensation Committee Report is retained, I recommend that the name of the compensation consultant (e.g., W. M. Mercer, Towers-Perrin) used by the Committee also be disclosed in the report.

Tabular Data and Performance Graph. I recommend reducing the number of years of past data from three to two for the named executives and retaining the performance graph. The performance graph is the most visible indicator of company performance and can most easily be related to the compensation trends reported for named executives over the past two years. While executive compensation data is available from past filings, the trends would not be as transparent as they are with two years of data reported in the single table. I further recommend reducing the number of years of reported data because in a subsequent section I will be recommending expansion of the number of named executives from 5 to 8.

Valuation of Stock Awards and Options. I recommend that the valuation method and assumptions regarding the valuation of equity-based compensation be disclosed in the proxy statement even though the methodology may be disclosed in other statements filed with the Commission. It is important to understand the company's valuation methodology when developing an overall picture of the executive's compensation. This contributes to overall transparency.

Perquisites. I support the proposal to establish a $10,000 minimum for perquisites. The current reporting standard of $50,000 or 10% of total salary and bonus permits too much manipulation on the part of executives to avoid the reporting threshold. A flat figure of $10,000 will be easier to administer and is likely to reduce attempts to manipulate the data to minimize reporting. Also, the higher current standard encourages the award of higher levels of perquisites which many employees and compensation critics feel should be paid from the executive's own salary and bonus.

Retirement Plan Payment and Benefits Table. I recommend the adoption of the enhanced reporting of executive retirement payments through the proposed table. Currently, disclosure for defined benefit plans consists of a general table for all similarly-situated employees in the company. It does not provide disclosure for any specific named executive. Thus, it masks the future payouts for given executives. The proposed table would aid openness and transparancy.

Named Executive Officers. I recommend that the following 5 executive officers be required named executives: principal executive officer, principal operating officer, principal financial officer, principal legal officer, and principal human resources officer. I also recommend the inclusion of the next three highest paid executives for a total of 8 named executives. While this may appear excessive from a tabular standpoint, the reduction in years of reported data from three to two, as suggested previously, will enlarge the compensation table by only one line. Given that proposals for executive compensation are developed with assistance from the Human Resources function, it would be useful in faciltating openness in disclosure if the compensation of the principal human resources officer was included in the compensation table.

Tabular Disclosure for Director Compensation. I support the inclusion of a tabular format for disclosure of director compensation. However, I would further recommend breaking the "fees earned or paid" column into the following categories: retainer fee, meeting fees, and committee fees. This additional breakout would permit additional review and comparison of the company's fee schedules with industry practice.

Thank you for the opportunity to comment on these proposed rule changes.