Weekend reading…

April 14, 2006

I’ve had a chance to at least skim many of the comment letters that were sent to the SEC on the executive compensation proposal and they make for some pretty interesting reading. According to a spokesman, they’ve received over 16,000 letters, though the overwhelming majority of them are this letter put out by the AFL-CIO. The letter writers read like a who’s who of prominent investors and equally prominent executives and the law and accounting firms that represent them. Though Warren Buffet hasn’t chimed in — at least not yet, though the SEC spokesman says they’re not done posting comments — Vanguard founder John Bogle is there. So too is Jeffrey Katzenberg of Dreamworks (DWA).

So what’s on these folks’ minds? The comments basically fall into two key categories:

More, more, more: For the most part, individual investors not only think most executives are getting paid too much. They also think that companies are going to great lengths to hide their information on executive comp. As footnoted.org readers know, I’m also in this camp. Though I sent a letter by Monday’s deadline, it has not been posted yet.

Less, less, less: Top executives, particularly those at entertainment companies, are outraged that the SEC is looking for more information on executive compensation and seem particularly concerned about the rule to disclose salaries, but not the names, of the three top-earning employees, even if they’re not executives. In a four page  letter sent by a law firm representing CBS, Disney, NBC Universal, News Corp. and Viacom, the firm argues that it would be too difficult and time-consuming to identify the salaries of "talent" given the various relationships common in the industry and that it wouldn’t provide investors with enough useful information.

The list as it stands is here. Despite the fact that many of the letters, particularly from the law and accounting firms, are in accounting-speak, they do make for an interesting read. As for what happens next, the SEC spokesman says that about four or five staffers have started reviewing the comments and will make their recommendations to the Commissioners sometime later this year.

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