Yahoo/A.P.:US government seeks to rein in executive pay

[SnyderShrugged]

another troubling sign that it wasnt going to be limited to only firms that accepted TARP money. This is just the first step.

I'm sure some here will say that this is yet another appropriate function of federal Government.

We all know it's not.

http://finance.yahoo.com/news/Administration-Rein-in-pay-apf-15500519.html?.v=6

WASHINGTON (AP) -- The Obama administration is taking a half-step toward taming U.S. executive pay. Some lawmakers prefer a fuller stride.

Democrats on the House Financial Services Committee said Thursday the administration's efforts to hector the private sector into reining in executive pay might not go far enough.

The administration contends that excessive compensation contributed to the U.S. financial crisis, but rejects direct intervention in corporate pay decisions.

Instead, the administration plans to seek legislation that would try to rein in compensation at publicly traded companies through nonbinding shareholder votes and less management influence on pay decisions.

"I do differ with the administration in that hope springs eternal and their position seems to be that if we strengthen the compensation committees we will do better," said the committee chairman, Rep. Barney Frank, a Democrat.

Rep. Brad Sherman, a Democrat, said that instead of giving shareholders a nonbinding voice on pay, their votes should be binding on boards of directors.

Democrats and administration officials agreed that companies across the private sector need to adjust compensation practices to avoid damaging the economy.

Gene Sperling, a counselor to Treasury Secretary Timothy Geithner, said administration guidelines call on all publicly held companies to link compensation to long-term performance, not short-term gains.

"We believe that compensation practices must be better aligned with long-term value and prudent risk management at all firms, and not just for the financial services industry," Sperling said.

The committee also heard from officials from the Federal Reserve and the Securities and Exchange Commission.

While the administration has approached the issue with caution, a top Republican said the plans amounted to "incessant government intervention."

"The president cannot continue his heavy-handed meddling in the private sector and expect it to function, much less flourish," said Rep. Tom Price, chairman of the Republican Study Committee.

Alabama Rep. Spencer Bachus, the top Republican on the committee, added: "We need to get government out of businesses."

The administration has drawn a sharp line between the overall corporate world and those institutions that have tapped the government's $700 billion Troubled Asset Relief Program.

On Wednesday, it set pay limits on companies that receive TARP assistance, with the toughest restrictions aimed at seven recipients of "exceptional assistance." They are Citigroup Inc., Bank of America Corp., General Motors Corp., Chrysler LLC, American International Group Inc., GMAC LLC and Chrysler Financial.

The regulations limit top executives of companies that receive TARP funds to bonuses of no more than one-third of their annual salaries.

The administration named Kenneth Feinberg, a lawyer who oversaw payments to families of Sept. 11, 2001 terrorist attack victims, as a "special master" with power to reject pay plans he deems excessive at the seven companies with the biggest injections of public money. Feinberg also would have authority to review compensation for the top 100 salaried employees at those companies.

[SnyderShrugged]

Business groups are daring President Barack Obama to impose pay caps on labor union bosses in light of indications the White House will limit how much corporate executives can be paid.

President Obama has argued “corporate greed” has contributed to the economic crisis and appointed a “compensation czar” to review executive pay for several companies receiving taxpayer bailout money Wednesday. Now White House officials have told the press legislation should be enacted to limit executive pay in private companies through nonbinding shareholders votes.

The Workforce Fairness Institute, which has lobbied heavily for the defeat of the Employee Free Choice Act to ease organization rules for labor unions, points to a 2008 Hudson Institute study that suggests unions have short-changed benefits for their rank and file in favor or generous executive compensation packages and to pad the coffers of their political allies, who are mostly Democrats.

“On average, the 21 largest unions pension plans had less than 70 percent of the funds that they would need to cover their total obligations, and none were fully funded,” the study said. “Seven were less than 65 percent funded. Yet 23 officer and staff funds from the same unions had 88.2 percent of the funding they would need to pay promise pensions, including seven full funded plans and another 13 with at least 80 percent of the required funds.”

Business leaders who oppose plans to limit executive pay say if it is to be passed, labor unions should be included as well.

“Given that union bosses’ job performances have yet to be scrutinized despite numerous, credible reports that they have engaged in ‘creative accounting’ and have mismanaged and underfunded worker pension plans, while wholly funding their own, is deplorable,” said Katie Packer, executive director of the Workforce Fairness Institute

http://www.washingtontimes.com/weblogs/back-story/2009/jun/11/business-groups-dare-obama-to-limit-pay-for-unions/

[Brad_Edwards_Fan]

although, if this is only going to apply to US companies, it could be a good time to be recruiting talent for european companies

[Oldskool]

In the same tone, here's business groups asking Obama to reign in the pay of his Union cronies. I wonder what Obama's excuse will be to bash the public sector but keep his union friends blameless.

---

http://www.washingtontimes.com/weblogs/back-story/2009/jun/11/business-groups-dare-obama-to-limit-pay-for-unions/

Business groups are daring President Barack Obama to impose pay caps on labor union bosses in light of indications the White House will limit how much corporate executives can be paid.

President Obama has argued “corporate greed” has contributed to the economic crisis and appointed a “compensation czar” to review executive pay for several companies receiving taxpayer bailout money Wednesday. Now White House officials have told the press legislation should be enacted to limit executive pay in private companies through nonbinding shareholders votes.

The Workforce Fairness Institute, which has lobbied heavily for the defeat of the Employee Free Choice Act to ease organization rules for labor unions, points to a 2008 Hudson Institute study that suggests unions have short-changed benefits for their rank and file in favor or generous executive compensation packages and to pad the coffers of their political allies, who are mostly Democrats.

“On average, the 21 largest unions pension plans had less than 70 percent of the funds that they would need to cover their total obligations, and none were fully funded,” the study said. “Seven were less than 65 percent funded. Yet 23 officer and staff funds from the same unions had 88.2 percent of the funding they would need to pay promise pensions, including seven full funded plans and another 13 with at least 80 percent of the required funds.”

Business leaders who oppose plans to limit executive pay say if it is to be passed, labor unions should be included as well.

“Given that union bosses’ job performances have yet to be scrutinized despite numerous, credible reports that they have engaged in ‘creative accounting’ and have mismanaged and underfunded worker pension plans, while wholly funding their own, is deplorable,” said Katie Packer, executive director of the Workforce Fairness Institute

[SnyderShrugged]

^^ LOL, Jinx oldschool!

[SnyderShrugged]

Barney frank gets mad

http://www.breitbart.tv/html/359043.html

[deejaydana]

This should be interesting in how it plays out. When does the 'law of unintended' consequences' bite the gov't in the *** for moving foward with this proposal? I understand the 'good intentions' behind it (in a very general sense) but the reality is more complicated.

[SnyderShrugged]

This should be interesting in how it plays out. When does the 'law of unintended' consequences' bite the gov't in the *** for moving foward with this proposal?

I'd say pretty soon after they start messing with the non-TARP's. Why would an uber talented Exec want to work for a company that has to abide by an arbitrary cieling on his pay and bonus potential.

simple answer, they wouldnt.

[Dan T.]

I'd say pretty soon after they start messing with the non-TARP's. Why would an uber talented Exec want to work for a company that has to abide by an arbitrary cieling on his pay and bonus potential.

simple answer, they wouldnt.

I blame inattentive or complicit shareholders and boards of directors for allowing the compensation scale of executives to get insanely out-of-whack. I'm sorry, but I don't care how "uber talented" some of these people are, they are robbing corporations and the shareholders with the compensation packages they are getting. More often than not, it's not tied to performance.

I have no problem at all for government stepping in on exec pay if the company accepted TARP money, but not for non-TARPs. But I wouldn't mind an awareness campaign to wake shareholders up to the robbery taking place under their noses by some executive compensation packages.

[Tulane Skins Fan]

I'm not a fan of this idea in principle, but something has to be done, right? What, I don't know.

[SnyderShrugged]

I blame inattentive or complicit shareholders and boards of directors for allowing the compensation scale of executives to get insanely out-of-whack. I'm sorry, but I don't care how "uber talented" some of these people are, they are robbing corporations and the shareholders with the compensation packages they are getting. More often than not, it's not tied to performance.

I have no problem at all for government stepping in on exec pay if the company accepted TARP money, but not for non-TARPs. But I wouldn't mind an awareness campaign to wake shareholders up to the robbery taking place under their noses by some executive compensation packages.

easy to say right up until the point the Feds tell you and I how much we can earn too.

It's not anyone's business beyond the individuals in the companies themselves to determine who gets paid what.

Would it be OK for the feds to tell Snyder how much he can pay a coach?

[SnyderShrugged]

I'm not a fan of this idea in principle, but something has to be done, right? What, I don't know.

why does something need to be done? The salaries are a business decision based on the merit/potential of the new hire. decisions can be both bad and good, but they arent to be made by the government.

[Tulane Skins Fan]

why does something need to be done? The salaries are a business decision based on the merit/potential of the new hire. decisions can be both bad and good, but they arent to be made by the government.

Totally agree with you on one hand. On the other hand, the ******* decisions of these people and the ******* decisions of the naive shareholders of these companies cost me a lot of money, and I didn't do **** wrong.

I'm just saying... we do live in a society. Unless I'm able to grow my own food, cattle, create my own power, develop my own birth control, and maintain my own house then I'm not gonna pretend that I don't rely on other people for somethings.

[Predicto]

From the OP:

The administration contends that excessive compensation contributed to the U.S. financial crisis, but rejects direct intervention in corporate pay decisions.

Instead, the administration plans to seek legislation that would try to rein in compensation at publicly traded companies through nonbinding shareholder votes and less management influence on pay decisions.

Ummm.... is that the evil we are discussing here? Having companies ask their shareholders what they think about executive compensation in those companies? That is the "government control" you are talking about?

Are you asserting that the traditional model of corporate governance is so sacrosanct that it is outrageous to even consider asking shareholders what they think?

[SnyderShrugged]

Totally agree with you on one hand. On the other hand, the ******* decisions of these people and the ******* decisions of the naive shareholders of these companies cost me a lot of money, and I didn't do **** wrong.

I'm just saying... we do live in a society. Unless I'm able to grow my own food, cattle, create my own power, develop my own birth control, and maintain my own house then I'm not gonna pretend that I don't rely on other people for somethings.

Yes, we live in a society and that society comes with risk when you decide to invest in a company. You take the risk that the company may make poor decisions and that risk can blow up in your face.

thats life.

One shouldnt become a shareholder if the risk is too great or if one is "naive".

Either way, regardless of who gets hurt by poor business decisions, the Feds have no business dictating pay whatsoever.

[SnyderShrugged]

From the OP:

Ummm.... is that the evil we are discussing here? Having companies ask their shareholders what they think about executive compensation in those companies? That is the "government control" you are talking about?

Are you asserting that the traditional model of corporate governance is so sacrosanct that it is outrageous to even consider asking shareholders what they think?

And you don't think that this is the first step towards not asking, but telling?

If thats where your mind is, I hope is opens up to reality.

Just read where the rest of the Dems are in this, frank in particular.

"I do differ with the administration in that hope springs eternal and their position seems to be that if we strengthen the compensation committees we will do better," said the committee chairman, Rep. Barney Frank, a Democrat.

Rep. Brad Sherman, a Democrat, said that instead of giving shareholders a nonbinding voice on pay, their votes should be binding on boards of directors.

Democrats and administration officials agreed that companies across the private sector need to adjust compensation practices to avoid damaging the economy.

Gene Sperling, a counselor to Treasury Secretary Timothy Geithner, said administration guidelines call on all publicly held companies to link compensation to long-term performance, not short-term gains.

"We believe that compensation practices must be better aligned with long-term value and prudent risk management at all firms, and not just for the financial services industry," Sperling said."

The seeds of preparation towards executive pay controls have been sowed. If it never comes to fruition I'll concede and say "wow, I was dead wrong". But intellectual honesty dictates that we see the writing on the wall.

[Predicto]

And you don't think that this is the first step towards not asking, but telling?

If thats where your mind is, I hope is opens up to reality.

Just read where the rest of the Dems are in this, frank in particular.

"I do differ with the administration in that hope springs eternal and their position seems to be that if we strengthen the compensation committees we will do better," said the committee chairman, Rep. Barney Frank, a Democrat.

Rep. Brad Sherman, a Democrat, said that instead of giving shareholders a nonbinding voice on pay, their votes should be binding on boards of directors.

Democrats and administration officials agreed that companies across the private sector need to adjust compensation practices to avoid damaging the economy.

Gene Sperling, a counselor to Treasury Secretary Timothy Geithner, said administration guidelines call on all publicly held companies to link compensation to long-term performance, not short-term gains.

"We believe that compensation practices must be better aligned with long-term value and prudent risk management at all firms, and not just for the financial services industry," Sperling said."

The seeds of preparation towards executive pay controls have been sowed. If it never comes to fruition I'll concede and say "wow, I was dead wrong". But intellectual honesty dictates that we see the writing on the wall.

So, what you are saying is that the 17th century model of "board of directors does what it wants and shareholders have no say" model of corporate governance is sacrosanct?

And you are also saying that a law giving the SHAREHOLDERS a say on executive compensation is the same thing as having the GOVERNMENT control compensation?

I just want to make sure we are talking about the same thing.

[SnyderShrugged]

So, what you are saying is that the 17th century model of "board of directors does what it wants and shareholders have no say" model of corporate governance is sacrosanct?

And you are also saying that a law giving the SHAREHOLDERS a say on executive compensation is the same thing as having the GOVERNMENT control compensation?

I just want to make sure we are talking about the same thing.

Yes, a whatever century board of directors has the right to dictate their approved compensation levels. If the shareholders don't like it...sell the shares or vote to change in the shareholder meetings. Or better yet, buy enough shares to have a louder voice. Thats business bud, and the Feds have no business in it.

You are purposely avoiding the core issue. yes, president Obama is trying to say the right things by saying he prefers a non-binding request. Just the few quotes from the Dems in congress portray their true agenda and that agenda is outright control over all executive's compensation.

If you cant see that is what is transpiring, I cant help you.

again, if I'm wrong about the direction of this, then I'll back off. But don't try to feign dumb and play act that this is just a simple, "we want to suggest" move by the feds.

[Tulane Skins Fan]

Yes, we live in a society and that society comes with risk when you decide to invest in a company. You take the risk that the company may make poor decisions and that risk can blow up in your face.

thats life.

One shouldnt become a shareholder if the risk is too great or if one is "naive".

Either way, regardless of who gets hurt by poor business decisions, the Feds have no business dictating pay whatsoever.

But it puts people who don't invest in a company at risk too. In fact, as we saw, it puts people who don't invest in any companies at risk also.

Thats all I'm saying. There's not a bubble around those that invest and those that don't anymore. The actions of idiots affect the outcomes of the wise.

[SnyderShrugged]

But it puts people who don't invest in a company at risk too. In fact, as we saw, it puts people who don't invest in any companies at risk also.

Thats all I'm saying. There's not a bubble around those that invest and those that don't anymore. The actions of idiots affect the outcomes of the wise.

we could say that about alomost every major industry in the world, and worse yet, we can say that about our entertainers and politicians too.

That doesnt make it Federal purview to oversee pay for anyone.

I know your heart is in the right place, but I think we arent seeing eye to eye more out of our politics than our realities.

(and I'm sorry if I sound a lil cranky...I am!!)

[Tulane Skins Fan]

we could say that about alomost every major industry in the world, and worse yet, we can say that about our entertainers and politicians too.

That doesnt make it Federal purview to oversee pay for anyone.

I know your heart is in the right place, but I think we arent seeing eye to eye more out of our politics than our realities.

(and I'm sorry if I sound a lil cranky...I am!!)

Like I said, I'm not for this... I think its a little scary. I don't know what the answer is though.

[Predicto]

Yes, a whatever century board of directors has the right to dictate their approved compensation levels. If the shareholders don't like it...sell the shares or vote to change in the shareholder meetings. Or better yet, buy enough shares to have a louder voice. Thats business bud, and the Feds have no business in it.

You are purposely avoiding the core issue. yes, president Obama is trying to say the right things by saying he prefers a non-binding request. Just the few quotes from the Dems in congress portray their true agenda and that agenda is outright control over all executive's compensation.

If you cant see that is what is transpiring, I cant help you.

again, if I'm wrong about the direction of this, then I'll back off. But don't try to feign dumb and play act that this is just a simple, "we want to suggest" move by the feds.

I have seen many allegations of insidious plots and nefarious conspiracies about Obama's "true agenda" on this board. I am still waiting for the imminent reappeance of the Fairness Doctrine, the giving over of sovereignity to a North American Union, and so forth.

From what I see, Obama and the Democrats are trying to make companies more accountable to their shareholders, not accountable to the government. You can tell me that it is a stalking horse for something bigger, but I'm not convinced.

[SnyderShrugged]

I have seen many allegations of insidious plots and nefarious conspiracies about Obama's "true agenda" on this board. I am still waiting for the imminent reappeance of the Fairness Doctrine, the giving over of sovereignity to a North American Union, and so forth.

From what I see, Obama and the Democrats are trying to make companies more accountable to their shareholders, not accountable to the government. You can tell me that it is a stalking horse for something bigger, but I'm not convinced.

of course you are not convinced! I expected nothing less!

(and I don't actually feel this is an Obama thing, more a congressional move to increase federal power even more than it's atrocious levels currently)

[Predicto]

of course you are not convinced! I expected nothing less!

(and I don't actually feel this is an Obama thing, more a congressional move to increase federal power even more than it's atrocious levels currently)

Again I ask - how is making publically traded companies accountable to their shareholders the same as making them accountable to the government?

[hkHog]

The day after election day I said to my roommate, a big Obama supporter, "welcome to the USSA" and we both laughed. I said that to him again last week when all the GM stuff was going down and neither of us laughed. Honestly, this has already gone far beyond what I thought possible and even my roommate has been voicing his displeasure with the way that Obama has been nationalizing industry after industry. This is just such a disaster all around, this man is destroying the very foundations of our economy and country at record pace.