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Comments of
Leonard Rosenthal
March 30, 2009
I want to compliment Douglas Chia’s well thought out comments to “Say on
Pay.” Additionally, I would like to add a few points of my own.
I particularly applaud his call for evaluating the quality of compensation
information that is currently disclosed. From my point of view, after having
seen two years of CD&As of many firms, we have a long way to go in being
provided information that is useful for and understandable by shareholders.
Too many companies have taken to inundating shareholders with information
with the purpose of obfuscation as opposed to clarification.
I also strongly agree that more needs to be done to make it easier for
companies to communicate with its shareholders. In particular, I would like
to see direct registration of all shareholders either at the corporate level
or at DTTC, and the elimination of record holders through the “Street Name”
system that currently exists. OBOs (Objecting Beneficial Holders) can still
have their stock registered under a nominee’s name. In this day and age,
there is no reason why an intermediary like Broadridge Financial Solutions
should have what amounts to a monopoly right to control information on
beneficial ownership.
I agree that we should and can learn from companies that have adopted “Say
on Pay” in the U.S. (keeping in mind that there isn’t a long track record on
this). Moreover, his point on making sure that this is a useful exercise of
shareholder rights makes a great deal of sense. Since understanding and
evaluating executive compensation is so important, we don’t want to come
back in a few years and say that this was a waste of time and money.
Leonard Rosenthal, Ph.D.
Professor of Finance
Bentley
College
Waltham,
MA
02452
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