Barack Obama seeks socialist oversight of executive pay – including companies that did not take or need bailouts.
The NY Times reports here.
WASHINGTON — The Obama administration will call for increased oversight of executive pay at all banks, Wall Street firms and possibly other companies as part of a sweeping plan to overhaul financial regulation, government officials said.
Is Barack Obama also trying to take control of companies that did not take or need bailout money? YES he is as the NY Times goes on to report:
The new rules will cover all financial institutions, including those not now covered by any pay rules because they are not receiving federal bailout money. Officials say the rules could also be applied more broadly to publicly traded companies, which already report about some executive pay practices to the Securities and Exchange Commission. Last month, as part of the stimulus package, Congress barred top executives at large banks getting rescue money from receiving bonuses exceeding one-third of their annual pay.
Beyond the pay rules, officials said the regulatory plan is expected to call for a broad new role for the Federal Reserve to oversee large companies, including major hedge funds, whose problems could pose risks to the entire financial system.
Will anyone stand against this madness? If Obama can take over payroll decisions of “executives” then what will stop his administration from walking these rules down the corporate ladder and control all salaries? If he can arbitrarily set the limit of pay of salaried employees in private company then what stops him from setting the minimum as well?
If executive pay gets pushed down it could cause a domino effect on all salaries in a company. Who really benefits from such an attack on the decisions of public companies? The shareholders? Hardly – AIG has 2.69 billion shares outstanding. Therefore the shareholders only receive $.01 annually in extra dividends for every $25 million in salaries that you cut out. One penny.
Does Obama intend to track down and account for all of the other methods of executive compensation? Using AIG again as an example we should look at SICO. Lying on top of AIG, controlled by its top executives are three private entities, called C.V. Starr & Co., Starr International Company (SICO), and The Starr Foundation. According to a report done by The Motley Fool these companies own shares in AIG and use income from AIG dividend payments to pay top executives at AIG. See full report here.
Given the such pass through payment systems the attempt to limit executive compensation is not only a socialist scheme it’s also a fools errand. Does the government really intend to track down the final recipient of every penny of every dividend paid out by financial companies? If not then this is nothing more than a way for socialists or communists to get their foot into the door of American companies and control the lives of private citizens and private property.