Speaking in Prescott, Arizona, Senator and presidential candidate John McCain weighed in on the topic of executive compensation, normally a topic discussed by Democrats. From The Wall Street Journal (subscription required:And could I add, I think it's outrageous that someone who is the head of Bear Stearns (NYSE: BSC) cashes millions and millions of dollars in stocks. And I think it's unconscionable when the guy who apparently is the head of Countrywide (NYSE: CFC) and his co-conspirators make huge amounts of money while Americans are facing the threat of losing their own homes. t's a terrible thing.While I'm glad to see that horrendous executive pay practices are now being discussed by candidates in both parties, McCain is really just playing up to populist causes with his comments about Americans losing their homes, and that's not the right reason to be mad about the pay packages that executives like Angelo Mozilo received.
Keep in mind that it's these home owners that are losing their homes that are the reason that Countrywide stock is in the toilet. Countrywide shareholders are not getting rich because people are losing their homes. Au contraire, Countrywide's loose lending practices had the worst impact on the company's shareholders.
As CEO of Countrywide, Mozilo's fiduciary duty was to the company's shareholders, and his pay should have been structured in a way that his compensation was structured to reflect the performance of the company. When the stock loses 80% of its value and Mozilo walks away with hundreds of millions, that's a problem, but it's a corporate governance problem, not a populist one.
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Reader Comments (Page 1 of 1)
4-07-2008 @ 10:36PM
Michael Schneider said...
Both George Bush and John McCain have made statements about executive pay. It's good to see this as the executive pay matter is getting to a point where it can lead to a backlash which would damage reasonable policies and political candidates and be in the way of effective public policy deliberation.
4-08-2008 @ 4:31PM
Heath said...
Corporate Greed And the Federal Government Go Hand In Hand