April 20, 2011
My wife and I are a typical middle-class couple who believes in investing in the stock market based on its original founding concept -- to fund the growth of companies in exchange for a return on our investment. As are the vast majority of average Americans, we are not in the stock market to "gamble".
We have approximately $1M current market value invested for our retirement. The investments are in mixtures of normal market accounts, IRAs and RothIRAs. The number one threat -- BY FAR -- to our investments has consistently been reckless Wall Street gambling that has negatively impacted out investments in complete conflict to our desire for long-term investment growth.
Disclosure of executive compensation in relation to median compensation provides a very valuable tool for analyzing the priorities of a corporation. Our preference is to invest in corporations that build strong foundations for long-term growth. Other investors may wish to "gamble" on short-term reckless growth that tends to weaken corporations in exchange for short-term boosts in stock prices. Executive compensation in relation to median compensation provides one tool for gaining a better understanding of which path a corporation tends to pursue.
There is only so much "work" an executive can accomplish regardless of compensation. Excessively high executive compensation drains resources from making other foundation building investments in the corporation. A corporation that lays off skilled individuals who accomplish tasks for the corporation, while maintaining or even increasing executive compensation when those executives cannot possibly contribute any additional work, are weakening the foundation of the corporation in order to benefit the executives. This is understandly welcome news for the executives, but the apparently unnecessary weakening of the corporation's foundation is bad news for investors interested in long-term growth.
The bottom-line that should guide the SEC is very clear. The vast majority of responsible American people are relying upon steady long-term market growth for their retirement investments. As part of the elected goverment of the US, the SEC owes its first responsibility to those investors. Gambling and other game playing on Wall Street by a distinct minority is a direct threat to the investments of the much larger American population as a whole. If certain groups of politicians believe that Americans should rely upon market investments for their retirement, then it becomes the responsibility of the SEC to insure the average American can do so with minimal interference from gamblers.