If there is an issue that has united popular indignation, Left and Right alike, executive compensation surely ranks near or at the top. But the bipartisan opposition to recent pay increases for the CEOs of mortgage conduits Fannie Mae and Freddie Mac, while highly understandable, misses the larger point. Several months ago, these companies, which account for nearly half the outstanding home mortgage debt in the U.S. and which since 2008 have been wards of the government, announced plans to raise annual CEO pay from $600,000 to $4 million. Their overseer, the Federal Housing Finance Agency, approved the hikes. In response, Congress overwhelmingly has passed (or is on the verge of passing) bills to roll them back. Lawmakers would do better to allow the firms to operate freely and without subsidies.
National Legal and Policy Center has visited the travails of these two companies many times over the last …
NLPC Associate Fellow Fred N. Sauer asserts that General Electric is no longer a great industrial company, but is now dominated by its General Electric Capital Services (GECS) division. Contrary to the conventional wisdom of the financial media that GECS has been GE’s strength in recent years, Sauer argues that GECS is dangerously reliant on short-term financing to support its own lending. The result is a company ultimately dependent on political influence to mitigate the risk, creating opportunities for the well connected, like Warren Buffett.
The role of CEO Jeffrey Immelt is explored and unfavorably contrasted to that of Jack Welch, his predecessor. Sauer charges that GE’s executives have put increasing their own compensation above the interests of shareholders- and taxpayers.
As someone who has sponsored “Say on Pay” shareholder proposals with companies like Boeing and Procter & Gamble, I wonder whether SEC-mandated votes on executive compensation will do any good. In fact, I worry that it may lead to a false sense of shareholder empowerment.
Yesterday, the Securities and Exchange Commission voted 3-2 to adopt a rule requiring public companies to hold an advisory vote on executive pay at least once every three years.
At Boeing in 2008, our “Say on Pay” proposal got 38% of the vote, an extremely strong vote for a proposal opposed by the company’s management. It had little impact. Management paid no attention to us and Boeing CEO James McNerney continues to be overpaid, even as the company experiences setback after setback.
Public companies should be controlled by shareholders, and their representatives, the board of directors. Unfortunately, corporate boards today are characterized by cronyism and …
Today I debated Wall Street pay with Keith Boykin of The Daily Voice. CNBC hosts were Melissa Francis, Larry Kudlow and Trish Regan. Here is a transcript:
Larry Kudlow: Is Wall Street pay too high? Here is what you said: Dave from Texas, “Absolutely they are overpaid. How many other American businesses have this kind of compensation”? But David from Illinois, “If we would stop being concerned about what someone else is making and focus on our own lives, the country would be better off”. Woah. Joining us now to see if the country is better off, Keith Boykin, editor of the Daily Voice and a CNBC contributor and Peter Flaherty, President of the National Legal and Policy Center. Keith Boykin, why do we bother to play these silly games? Who is making what compared to who and how and why? Isn’t that just a little class warfare?