April 2, 2001

Mr. Jonathan G. Katz, Secretary
U.S. Securities and Exchange Commission
450 Fifth Street N.W.
Washington, D.C. 20549-0609

Re: File Number S7-04-01

Dear Mr. Katz:

PricewaterhouseCoopers LLP appreciates the opportunity to comment on Disclosure of Equity Compensation Plan Information (the "Release" or the "proposed rule"). While we are supportive of the Securities and Exchange Commission's efforts to improve financial reporting, we do not support the proposed rule and consider its requirements to be contrary to other initiatives that the Commission and the accounting profession have undertaken to simplify disclosures and to eliminate redundancies in financial reporting.

We believe that instead of increasing the overall volume and level of detail of financial reports, the Commission should focus on streamlining reporting and reducing redundancies. The recently issued report of the GAAP-SEC Disclosure Requirements Working Group, which is part of the Business Reporting Research Project sponsored by the Financial Accounting Standards Board (FASB), might be helpful in this regard. The working group was formed to (1) identify redundancies in filings that are governed by the Commission and Generally Accepted Accounting Principles (GAAP) and (2) recommend ways of preventing redundancies in the future. We believe that requiring additional information about equity compensation plans in proxy statements or annual reports on Form 10-K or 10-KSB would increase the redundancy between GAAP and SEC disclosure requirements since FASB Statement No. 123 (FAS 123), Accounting for Stock-Based Compensation, currently requires disclosures about stock based compensation arrangements in an entity's financial statements, which we believe are sufficient. In addition, we believe that the proposed rule would also be redundant with the efforts of the New York Stock Exchange to increase shareholder approval of stock option plans and develop a possible listing standard that would include a dilution test.

We also have significant concerns about the level of materiality that the Commission is applying for financial reporting. The Release is consistent with previous views expressed by the staff regarding FAS 123. In this regard, the staff has previously noted that although the requisite disclosures may not be quantitatively material to every registrant, investors' keen interest in stock compensation and the related-party nature of stock plans indicates that these disclosures are material to readers of financial statements. We do not believe that such a low threshold of materiality is appropriate and are concerned about the effect that the proposed rule will have of decreasing the overall understandability of reports, by increasing their bulk with redundant data, as well as the increased cost and effort for registrants to meet the new the reporting requirements.

Further it appears to us that the disclosures proposed in the Release may have been based largely on analysts' requests for an assessment of the potential dilution of stock plans. While we are sensitive to the needs of the user community, we believe that they have not made a compelling enough case to justify the need for the proposed additional disclosures, since this information is generally available from the footnotes.

In the attachment to this letter, we have expressed our views on specific questions that appear in the Release. Our responses should be considered in conjunction with the general comments expressed above.

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We appreciate the opportunity to express our views and would be pleased to discuss our comments or answer any questions that the staff may have. Please do not hesitate to contact Jay Hartig (973-236-7248) regarding our submission.

Sincerely,

Attachment - Response to Specific Requests for Comments

This attachment contains our views on selected questions that the Commission poses in the Release.

Question 1 - Appropriateness of the additional information

Would narrative disclosure be preferable to the proposed tabular format? Are there any additional categories of information (such as weighted-average exercise price information) or different categories of information that should be included in the disclosure? Is it useful to disclose information about the number of securities awarded and the number of options, warrants, or rights granted during the last completed fiscal year? Would disclosure of prior awards and grants over a different time period be more appropriate, and, if so, what period? When disclosure is being made in a registrant's proxy statement because the registrant is seeking security holder action regarding a compensation plan, should the tabular disclosure also cover the plan upon which action is being taken?

Since the disclosure requirements of FAS 123 are already fairly extensive, we do not believe that the Commission should require additional disclosures at this time, since this would only increase the redundancy between GAAP and SEC disclosure requirements. In particular, FAS 123 currently requires that an entity disclose the following information in its financial statements: (1) the number of shares authorized for grants of options or other equity instruments; (2) the number and weighted-average exercise price of options that are (a) outstanding at the beginning of the year, (b) outstanding at the end of the year, (c) exercisable at the end of the year, and (d) granted, exercised, forfeited, or have expired during the year for each year for which an income statement is presented; and (3) the number, weighted-average exercise price, and weighted-average remaining contractual life of options that are outstanding and options that are currently exercisable on the date of the latest statement of financial position that has been presented by the entity. Also, these disclosures are required if an entity uses equity instruments to acquire goods and services other than employee services to the extent that those disclosures are important in understanding the effects of those transactions on the financial statements (FAS 123 paragraph 46). Therefore to the extent such disclosures are absent from financial reports, it indicates that registrants and their auditors have concluded such transactions are not important in understanding the financial statements. We have seen nothing in the rule proposal that would support the notion that the absence of immaterial items is misleading investors. In particular, we believe the proposal to disclose the number of authorized shares is among the least relevant of all the proposed additional disclosures (see comments below).

Question 2 - Aggregation of individual arrangements

Is aggregated disclosure of individual arrangements appropriate? If not, what alternative approach would be preferable? Should aggregated disclosure be permitted in the case of certain equity compensation plans (such as plans that are assumed by the acquiring company in a merger, consolidation, or other acquisition transaction)?

We have concerns about the Commission's disclosure requirements for individual arrangements. The proposed rule adheres to the definition of a plan used in Item 402(a)(7)(ii). Under that definition, a compensation plan may be any plan, contract, authorization, or arrangement (whether or not it is formally documented) that applies to one or more persons. If passed, the proposed rule would increase significantly the amount of information that registrants would be required to disclose, particularly registrants that award securities to parties other than employees in conjunction with selling goods or services. In addition, the proposed rule could force registrants to disclose proprietary business information that would compromise their competitive advantage and eventually injure shareholders by disclosing sensitive data, unless quantitatively material for general disclosure purposes. We do not believe that individual arrangements should fall under the disclosure requirements of the Release.

Question 3 - Need for additional information in the absence of security-holder approval

Should additional or different disclosure be required with respect to equity compensation plans that have been adopted without security-holder approval (such as the information currently required under Item 10 of Schedule 14A)? Is it sufficient to require the disclosure of such plan's "material features," or should we identify the specific terms and conditions of the plan that must be disclosed (such as exercise price, vesting and expiration date information, or the existence of reload, stock swap, loan or option repricing features)? In lieu of, or in addition to, the disclosure required for an equity compensation plan that has been adopted without security-holder approval, should a registrant be required to file any such plan as an exhibit to the registrant's annual report on Form 10-K for the fiscal year in which the plan was adopted?

As discussed in Questions 1 and 2, we do not believe that this information should be required. The absence of security-holder approval is a matter of state and federal laws and should not necessarily trigger the need for disclosure.

Question 4 - Appropriateness of the location of the proposed disclosure

Should disclosure be required in the proxy statement whether or not a registrant is submitting a compensation plan for security-holder action? If so, how would the disclosure requirements be made applicable to registrants that are subject to reporting under Section 15(d) of the Exchange Act? Alternatively, is it necessary to provide disclosure in years when a registrant is not submitting a compensation plan for security-holder action? Is similar information currently available to security holders, and, if so, is this information adequate? Should the proposed disclosure be required in registration statements filed under the Securities Act of 1933?

We believe that most of the information that the proposed rule would require is already included in the notes to the financial statements included in the appropriate filing under the Exchange Act of 1934 or the Securities Act of 1933. Consequently, we do not see a need for registrants to provide additional information in the proxy statement or in Form 10-K or 10-KSB filings.