Vanguard founder John C. "Jack" Bogle is urging the Securities and Exchange Commission to require mutual fund companies to better disclose how much top executives are paid in salary, bonus and perks, in a letter he sent to regulators on April 10.

"The Commission's new proposals for compensation disclosure provide a timely opportunity to rectify the previous omission of compensation data for mutual fund executives," wrote Bogle in his letter available on the SEC web site.

The proposed rule, published in the Feb. 8 edition of the Federal Register, calls for clearer disclosure of compensation of executives and directors of companies that issue securities. Bogle argued that mutual funds, which are usually operated by a separate management company, be included, too. "There is no longer any way to rationalize the exclusion from the compensation disclosure requirements applicable to the executives of all other publicly held corporations," wrote Bogle. Individual funds now satisfy disclosure requirements by publishing the total sum of contracted payments each makes to their management company.

"There is no way for fund shareholders to appraise the compensation paid to the executives who serve them through the vehicle of the management company, even though they often serve at the same time as officers of the funds themselves," wrote Bogle.  "It is high time that this corporate veil be pierced."

His solution is two-fold. First, he suggests that funds include in their proxies the dollar value of the direct and indirect compensation of the five highest-paid executives of the management company and the distributor serving the account.

"Given the clear abuses that we have witnessed in executive compensation by regular corporations and the many instances in which disclosure is weak and 'fringe benefits' and 'prerequisites' are often hidden, it is high time that the compensation of executives of fund management companies be disclosed to fund owners," Bogle wrote.

Second, Bogle said, mutual fund companies must also tell shareholders about earnings on executives' deferred compensation.

"While the Commission has cast a broad net to capture the many (sometimes seemingly infinite!) forms of direct and indirect compensation and perquisites offered by corporations," Bogle wrote, "one area has been left either disguised or invisible:  the annual rate of  interest credited to deferred compensation balances accrued for executives."

Bogle cites research he did that found General Electric executives accrued such benefits at rates between 9.25% and 13% annually, beating most fixed income market rates. "If 'sunlight is the best remedy,' these accrual rates (which can result in the accumulation of truly staggering amounts over time) must be disclosed," he wrote.

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