An oxymoron you say? Maybe.
There are two types of generally favored forms of executive pay reform. Say on Pay, and a Mandatory Cap.
Say on Pay
Currently, there is only one piece of federal legislation currently being deliberated in the United States Congress that affects executive pay. That’s the “Say on pay” legislative proposal which would require shareholders to cast nonbinding votes on executive pay
lol. Nonbinding. So essentially, it means nothing. But if it were binding would that really make a difference?
Public company ownership is just that, public. Anyone in America can purchase a share in a public company, with no discriminating strings attached. But if that’s the case, then don’t citizens already have control over executive pay?
Of course they do.
Shareholders elect board members who in turn recruit and compensate executives for a well-run corporation. So it seems to me, if shareholders disagree with how much an executive is being paid, all they really have to do is demand that the board release them, take control of the board themselves, or, according to company bylaws, replace those board members with more intelligent leadership at the next annual meeting. These are not hard things. The only reason executives make as much as they do is because shareholders aren’t opposed to it.
If you’re not a majority shareholder in a major corporation, you can continue to complain about executive pay, or you can fix the problem the right way. By affecting the companies real leadership. Do what you should and vote with your wallet. No better way to affect a public company than to motivate shareholders to make better decisions. And the best way to a shareholders heart, is by his wallet.
Opponents of Say on Pay, including President-Elect Barack Obama, have voiced a desire to be able to limit executive pay to that of 20 times that of the average worker’s salary. That, they argue, would create a “fair” compensation structure.
The concept of “fair” in regards to pay is really what frustrates me. Is it fair for an executive to make $20,000,000 a year while someone in the lower rungs is only making $20,000? While I agree it’s not fair, I hardly think it’s appropriate for the Government to regulate how shareholders (aka The People) chooses to compensate it’s leadership and representatives. To me, this only furthers the US mindset of entitlement.
Since$20,000,000 vs. $20,000 is clearly not fair, something must be done to make it fair. We’re entitled to such! The thought of taking action (Voting with your wallet, see above) is despicable. Someone, fix this problem for me!
A friend of mine and a wise man once reiterated to me a phrase from the Declaration of Independence. That the people are endowed with an inalienable right to life, liberty, and the pursuit of happiness.
Emphasis has been added on what I believe to be a critical detail in our declaration of independence. People have the right to pursue happiness. By the foundation and laws of our nation, no man is guaranteed happiness, but all men are free to pursue a life of happiness.
While that last thought will likely one day become an enormous blog article all it’s own, I found it an appropriate thought to convey here, as we discuss the idea of entitlement, fairness, and yes, executive pay.