April 7, 2006
I would like to begin by commending the commission on its initiative. I agree with the philosophy of providing investors sufficient information with which to make informed decisions, rather than regulating compensation directly. Unfortunately, and this is the reason for my letter, I believe the proposal does not require disclosure of some very important information - performance targets. Without this information how is an investor to determine if the target is adequate? While the fear expressed in the proposal is that this would provide information to competitors that would put the company making the disclosure at a competitive disadvantage, the risk, in my opinion is minimal. Corporations routinely make forecasts as to sales and earnings growth targets, and if they don't analysts do. Thus much of the information that would be released by the company disclosing its compensation performance targets are already in the public domain. However releasing targets, as well as other plan parameters, would be very useful to investors and others seeking to determine whether the compensation plan provides the proper incentives to executives and whether the company truly provides pay for performance. Hence I strongly urge you to reconsider your decision and require companies disclose this information.