The Treasury Department’s expected plan to cut executive pay by up to 90 percent – at the seven companies that received the most in bailout money – is not only good news. It’s great news!
It’s about time! The corporate elite, the rich of the rich, have been feeding at the public trough for far too long. For them to expect tens of millions in executive pay less than a year after being bailed out – with our tax dollars – is like rubbing salt in a fresh wound.
Not only did they cause of the current economic meltdown, in some cases they benefited from it. While they got golden parachutes, lavish perks, bonuses and stock options, the average working- class American got pink slips, foreclosure notices and the humiliation of having to ask a family member, relative, friend or charity for a little help during tough times.
It’s ironic how the lords of industry and the captains of finance cry foul when we ask them to sacrifice a little, maybe have a little modesty and think about ordinary folks.
They destroy families. They lay off 10,000 here, 20,000 there. They force draconian wage and health care cuts down our throats. They do it all with the stroke of a pen.
And then they cry foul!
For example, the Wall Street Journal is calling the proposed executive pay cuts “a seismic shift.” Not only will executives get paid less at AIG, Citigroup, Bank of America, GM and the other bailed out companies, but the broader impact will be on corporate governance generally, they fear.
The Wall Street Journal quotes Charles Elson, head of the Weinberg Center for Corporate Governance at the University of Delaware: The proposed changes “dramatically injects the government into pay practices at private companies … It diminishes the authority of the board and the other investors…”
Additionally, Elson who sits on the board of HealthSouth Corp., says, “… the approach is atrocious because of the meddling.”
The Journal continues: Mr. Espen Eckbo, the director of Center for Corporate Governance at Dartmouth College, “anticipates increased shareholder pressure on companies without federal bailouts to create board risk committees and split the roles of chairman and CEO. There likely will be more non-binding stockholder resolutions next year calling for such changes.”
The Journal quotes a management attorney: “It seems very unprecedented for the government to be so dramatically realigning corporate structure on pay and governance.” Additionally, they fear that government intervention will “run a risk of driving out an important tier of management…”
Ominously, J.W. Verret, a corporate law expert at George Mason University School of Law, said, “There’s definitely never been anything like this where a government sets pay for a company that’s publicly traded.”
Oh, well pardon me if I don’t shed crocodile tears for the corporate elite.
It’s unmistakable though. They seem a little worried. Could it be that their days of riding rough-shod, smoking pistol in one hand and a big bag of cash in the other, are numbered. Could it be that the federal government might play a pro-active role and reign in corporate abuse. Could it be that the top executives will actually have to think about workers and their communities. Could it be that they may be held accountable for the piss-poor job they’ve done so far. Could it be?
If we do, in fact, begin to see a “seismic shift” – a dramatic injection of government regulation and a realigning of corporate structure on pay and governance – then we may have turned a corner. We may have joined the rest of the modern world in capping executive pay.