The SEC’s proposed regulations for increasing “disclosure” of executive compensation is being promoted as morally and economically uncontroversial. In fact, these regulations would be both immoral and economically destructive.
How much and what kind of information is made available by a company should be solely up to the owners of the business: the shareholders. There are many legitimate reasons a business would not want to engage in the extensive cataloguing and the public release of “plain language” numbers that the SEC is demanding: the costs of gathering such information, the desire not to foment internal competition among executives, and the dangers of releasing dumbed-down, misleading compensation figures.
Anyone who is genuinely interested in the rights of shareholders should demand not new regulations on their companies, but the removal of existing SEC regulations on takeovers and board membership that help entrench inferior managers.
”’Dr. Yaron Brook is the Executive director of the Ayn Rand Institute in Irvine, CA.”’