Can you imagine the anxiety in executive offices all across the country? Why is that you ask? The Obama Administration wants to give the SEC new powers on executive pay by forcing firms to let shareholders vote on executive pay and make executives who set pay schedules more independent.
Today's proposal, which is subject to Congressional approval, would cover all companies. The administration will also name a "special master" to monitor compensation plans for companies receiving government assistance.
The push is on. US Treasury Secretary Geithner is meeting with SEC Chairwoman Mary Schapiro and Daniel Tarullo, an expert on executive compensation. The Treasury will name Kennith Feinberg, attorney, to review compensation for companies receiving government assistance.
Senator Dodd has attached a provision to the $787 billion stimulus package that restricts executive compensation for top employees who receive more than $500 million from the Treasury's financial rescue fund.
Now these are grand proposals. However, we know that the lobbyists will gather in force and descend upon Congress to defeat any tampering with executive pay. They did this a few months ago when Congress attempted to limit executive pay to $500,000 for bank executives receiving TARP monies. The lobbyists with the help of President Obama leaned on Congress and shot this down. A watered down version was passed setting executive pay based on merit. Who determines merit is still a mystery. So we'll wait and see how far this one gets.
Do you believe that these proposals will be approved by Congress?
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Reader Comments (Page 1 of 1)
6-10-2009 @ 6:18PM
william lindblad said...
Dreamworld. Those that make the rules are too heavy in debt to the business oligarch, and in fact many are part of it.
Talk is cheap and in this case it will be little more than political rhetoric. The shareholder proviso is little more than a commentary or confidence vote, non-binding and pops up now and than. Congress has never seen fit to even allow this voice and there is little reason to believe that there will be major change of mind set.
Ever hear the statement of friends in high places?
6-11-2009 @ 7:42AM
Frank said...
more nobama muslim/communism. just what we need governme interference in business. boards of directors determine executive pay not governments. be scared America. join grassfire.org
6-11-2009 @ 8:13AM
sonnype said...
I would be happy if the SEC just did what it was set up to do and enforce the regulations imposed on Wall Street instead of letting these people do what ever they want in order to make more money no matter who it harms or what they destroy in the process.The SEC has been asleep at the wheel for to long and it has destroyed public confidence in the Governments ability or desire to regulate Wall Street.Untill the SEC is serious about enforcement I will not re-enter the market.
6-11-2009 @ 8:59AM
Kevin said...
I don't see this type of regulation as benefiting to the consumer or business as a whole. If they wanted to decrease executive compensation. All they need to do is make a new tax bracket that bumps taxes an extra 20-30 percent over a certain adjusted income limit of lets say 300k. It's very well assured that those people won't want to make over that amount unless it's going beat the taxes on it.
Bump up the taxes on short-term capital gains and lower the taxes on long-term capital gains while yer at it.
6-18-2009 @ 12:51PM
thedude said...
Everything the Obama administration attempts only makes the job of his successors more difficult. The first 100 days of the next administration (can't come soon enough) will be spent undoing all the damage Obama has already done to the US.
As far as the government is concerned they need to keep out of the running of corporations. All they manage to do is to expedite bankruptcy or the sale to foreign owned agencies.
The US will be lucky to even have any corporations besides Wal-Mart by the time the Obama -Clinton cartel is done.
On topic regarding executive pay, there should be no cap to it although it should be based on a percentage of the amount of taxes paid by the company. If a company pays $1 billion in taxes there should be no qualms of a CEO receiving $100 million in salary. On the other hand if a company pays little or no taxes due to claiming aggressive losses or filing bankruptcy then the top level execs should receive NO compensation. This would be an honorable method of executive compensation based on performance but we all know there is no honor amongst CEO's or politicians
Any way you look at it the government needs to abstain from commandeering corporation operations, but the boards should be more demanding of pay for performance.