Obama calls for checks on executive pay

[onehandle]

Source: AP

INDIANAPOLIS - Democratic presidential candidate Barack Obama is prodding his populist economic message Friday by demanding that company shareholders have a say in how much executives get paid.
ADVERTISEMENT

Obama, in remarks he planned to make to reporters Friday morning, wants Congress to pass legislation he has sponsored that would require corporations to have a nonbinding vote by shareholders on executive compensation packages.

Under Obama's legislation, shareholders could not veto a compensation package offered to an executive and would not place limits on pay. Rather, they would have a means to publicly express their position.

A similar bill passed the House last year.

Read more: http://news.yahoo.com/s/ap/20080411/ap_on_el_pr/obama

---

Good for him. Obama needs to take more of Edwards' stands.

Neither Obama or Clinton have been strong enough on corporate criminals, but that's the Centrist way.

[asthmaticeog]

1. Checks? You'd think CEOs would be able to get direct deposit.

[DeSwiss]

12. Here ya go....

[calimary]

18. OMG - I love that smilie!

Where'd you find it? How do you reproduce it?

[DeSwiss]

20. I ripped it off Estimatedprophet....

...way, way long ago. Right click on the graphic and "save" or click "properties" to get the url.

[ckramer]

2. Wait for someone calling him communist by end of the day

[xioaping]

31. Dang communist!

:)

[BadgerKid]

3. can't shareholders already do this themselves?

As a shareholder, you can submit proposals to the annual meeting for a vote by the shareholders. If enough shareholders agree, the company has to abide.

What exactly is Obama suggesting that shareholders can't already do? :shrug:

[ckramer]

4. Yep, shareholder of 100 shares

How did you vote?

LOL

[BadgerKid]

7. By that logic, my 1 share for POTUS doesn't matter either.

The answer is: when the shareholders stick together, suddenly they wield more power.

Edit: typo

[Occulus]

14. There's a difference between political 'shares' and corporate shares, though.

You can't compare the civil vote to a shareholder's vote, because while everyone- or nearly everyone- is capable of voting for the next political officeholder, only a few hold shares in any given company vs. the entire US population. It is far, far easier for citizens to organize to a political or social cause, because so many many more have an interest.

For example, I could make a reasonable guess that all or nearly all the people in my apartment complex could cast a vote for President this fall, but not that the each could also vote in the next Dow Chemical shareholder meeting. Publicly, shareholders in the nation are more easily able to organize, since nearly everyone is a legal citizen (minus those here illegally, who aren't likely or even able to register to vote in the first place).

I've never seen a "comprehensive shareholder listing" for Acme, for example, even though I know that lots and lots of people hold shares in Acme. However, I do have a public telephone directory (yes, that comparison was more valid before all the new ways to access the telephone system we have today, such as cellphones, but I think you get my point).

Perhaps we should require corporate entities to, as a condition of doing business at all, make their lists of shareholders publicly available to any and all comers. Maybe that would help us crack down on corporate abuses...

[Occulus]

11. Yeah, that's kind of where the concept of "the shareholder's voice"

falls apart, isn't it?

Now, if the shareholders knew who the other shareholders were, they would be able to organize and get a lot more done, but that isn't the case.

I wonder why? :think:

[Lasher]

8. Yes, but in reality the deck is stacked against shareholders.

I guess this proposal is OK but what we really need to do is end the incestuous relationships between the BODs and senior management. The BOD is supposed to put shareholders' interests first and supervise the CEO. But this relationship has been corrupted beyond recognition because the CEO typically selects Board members, and is himself Chairman of the Board.

Add to that the widespread BOD interlocks and you have Corporate America today - Board members of Company A who empathize almost exclusively with their CEO because they themselves are CEO at Company B where the Company A CEO is a Board member.

[antigop]

9. Also, part of the problem is the tremendous leverage mutual funds have

http://moneycentral.msn.com/content/P75037.asp

Investors' growing disdain for actively managed mutual funds has produced a disturbing consequence: Ownership of American public companies is increasingly concentrated in the hands of just four giant index-fund managers.

Through the end of 2003, the world's four largest index-fund firms -- Barclays (BCS, news, msgs), State Street (STT, news, msgs), Fidelity Management and Vanguard Group -- in aggregate held an average of 12.6% of the 20 largest U.S. companies on behalf of their clients. Together, for instance, this elite band owns 15% of IBM (IBM, news, msgs), 15% of Citigroup (C, news, msgs) and 14.5% of Johnson & Johnson (JNJ, news, msgs).

The mutual funds vote the shares that they hold. And they hold a lot of shares in the company 401(k)'s that they manage.

[Lasher]

15. I have seen a proposal to take those voting priveleges from the fund managers

and give them to the people who own the mutual fund shares. I think that's one appropriate solution. After all, the fund managers don't really own the stocks, they are just buying them on behalf of their customers. That's why they're called 'managers'.

Another problem is that if you as a shareholder don't vote, the Board of Directors gets to vote your shares for you, any way they see fit. It would be easy enough to rectify that right now with a law that prohibits the practice. But don't hold your breath.

A basic premise of publicly owned corporations is that the BODs should be beholden primarily to the shareholders. They are not, and this is the root cause of disgusting levels of compensation for senior executives.

[antigop]

17. and there is a conflict of interest between their voting of the shares and the fees they get by ...

manging the 401(k) shares. They don't want to bite the hand that feeds them -- they will be reluctant to vote against a company's management if they provide management for said company's 401(k).

[Lasher]

19. I see universal healthcare is not your only forte'.

I've seen that issue raised too. There's so much money flying around I guess there's endless ways to legally corrupt fund managers. You're the fund manager. How about I hire your spouse into a cushy six or seven figure job. Gonna vote my way? Make sure she doesn't use the same last name as you. Wouldn't want people to get the wrong impression.

[lark]

25. Half meansures

This doesn't go nearly far enough, and I thought shareholders already had this choice. I've read about shareholders giving boards grief at yearly meetings about CEO pay. I want some bold steps taken to end the rich folks incestuous agreement with boards of their peers, that they chose, and the golden parachute crap while the working folks just lose their jobs.

[jmowreader]

24. They can TECHNICALLY do this...

but in publicly-traded companies, each SHARE, not each shareholder, has one vote.

Say you, I and Ava all own shares in The Very Big Corporation of America. You've got 100 shares, I've got 500 shares and Ava, because selling anti-Bush shirts on peacetakescourage.com made her a Dot Com Brazillionaire, has 150,000 shares. If an issue comes up that you and I like but Ava doesn't and we're the only three who are voting, the fact there's two of us against one of her won't matter: the vote is 150,000 to 600 if we vote our consciences.

Now as to the issue of executive compensation: the large-scale shareholders who have the real power in public corporations are all fat cats who wouldn't want their shareholders deciding THEIR salaries either.

Another thing that's noteworthy is that all companies that hold annual meetings of shareholders publish the agenda beforehand. In it are all the proposals--and the company's recommendation on which way you should vote. This one would always be recommended that you vote against.

[bemildred]

5. Indeed! Let's squeeze the rich for a change.

We have screwed the poor enough for the time being. Time to go where the money is. Time for all the good CEOs to step up and sacrifice for America.

[ckramer]

6. Obama should also call for following:

Limit college tuition increase;

Limit cost of healthcare;

Limit the power of the Fed;

Limit raising of property taxes;

Limit the terms law makers can serve.

Unlimit the unemployment benefits;

[calimary]

21. And why should the shareholder vote on CEO pay be nonbinding?

[Occulus]

10. Let's make it a percentage of the company's lowest-paid temp worker.

Nobody will ever be able to convince me that any CEO is worth tens or hundreds of millions of dollars a year. It just isn't true, and anyone claiming it is is pretty much an apologist for gross inequity in my book.

[The2ndWheel]

13. So a nonbinding vote with no power?

I guess that's better than the binding vote with no power we get every few years.

[Hugin]

16. I was about to point out the same thing...

Nonbinding... Pretty worthless.

[Neshanic]

22. He's so inspirational. So dreamy! He really goes out on those limbs for us.

[jaybeat]

23. Damn it! Now I have to buy a new keyboard!

:spray:

Fuck. That is the funniest thing I have read in I don't know how long!

Thanks. I really needed that.

:rofl:

[Acadia Blue]

26. Right on! It would take $$$$$ investors to lose lots of money

before the rich would be willing to question the bloated parasitical CEOs. They are nothing more than fatted repigs living on the flesh of the wage earners in this country and they are making Karl Marx correct in his assessment of capitalism.

[Moloch]

27. This is a VERY important issue...

Its reprehensible that CEOs earn hundreds of times more than regular employees. Its good that Obama is stading up and confronting this.

[BootinUp]

28. screw that, just raise taxes on the bastards. nt

[xioaping]

32. Thats a tax increase on us. Companies dont pay taxes

they just pass them on. The greedy won't let a little thing like higher taxes stand in the way of profit. They just pass the costs on to you and me.

[napi21]

29. The only way I can see this working is if each shareholder only gets

ONE VOTE, just like Bill Gates gets only one vote for the POTUS.

[ileus]

30. I recommend starting with Senators and Congressmen.

[Yupster]

33. Excellent idea

If shareholders had a say (and why shouldn't they as the owners of the corporation) there would not be obscene bonuses.

Shareholders who had a great return on their investments would be generous I bet, but you wouldn't see the $ 10 million bonuses for a losing stock or the $ 120 million parachute to leave a company. Stockholders just wouldn't approve that.

[Johnny Harpo]

34. Obama Is On The Right Track...BUT.....

what good is another piece of legislation with no power?