Federal Law Should Force Full Disclosure of Executive Compensation at All Levels

Graef Crystal is too loose in his efforts to paint a dark picture of the federal legislation (“Need a Good Laugh? Look at Caps on Executive Pay,” May 12).

For example, he simply disregards the collective action problems faced by a diverse conglomeration of relatively small shareholders and attributes the lack of private-sector oversight to their being “too stupid or lazy to step forward.” When one considers just how much intelligence and energy--not to mention money--is required to succeed in mobilizing a proxy contest under current law, a genuine question emerges as to the potential efficacy of such shareholder-sponsored efforts.

The federal legislation was enacted, at least in part, as a solution to the problems faced by individual shareholders as a result of the procedural hurdles of corporate law. The fact that the law in question has turned out to resemble a piece of Swiss cheese more than a protective sheath should not obfuscate its raison d’etre . While I agree that “much of what emanates from Washington . . . is a farce,” in this case there is a role to be played by a better piece of legislation.

In my opinion, the law should force full disclosure of executive compensation at all levels and, perhaps, should provide shareholders with a right (exercisable by a small percentage of outstanding shares, say 10%) to be presented with the compensation slate for their approval. Without enhancing shareholder power in this area, abusive diversions of company capital into the pockets of executives is quite likely to continue.

S. BENJAMIN ROZWOOD

Los Angeles