I see that the Obama administration has said that it does not want to set executive compensation levels, but they have provided guidelines to the House Financial Services committee. It seems that they plan to set specific policies for executive compensation for financial institutions -- and probably other businesses -- that accept bailouts from the government. While I can see risks in this, I can also see why the administration feels both entitled to and obligated to impose compensation policies. I'm not going to debate that.
What I'm interested in discussing is the effects and future of these "guidelines" for executive compensation provided to the House Financial Services committee. What could be the range of effect of these guidelines? Could they be applied to every business that does any business with the federal government? Does IBM sell product to the federal government? Does MicroSoft sell product to the federal government? Does Halliburton sell product to the federal government? Does Exxon sell product to the federal government? I don't know the answers to those questions, but I am suggesting that the cross-section of companies that may have business relationships with the federal government and hence may be subject to imposition of these guidelines might be pretty extensive. Could the federal government compel states that receive federal money to impose these guidelines on companies that do business with the states?
I don't know what the content of these guidelines may be. What is said about them makes some sense (link executive pay to real performance and realign the performance parameters to long term versus short term results). But notwithstanding, I am very averse to the idea of government dictating to business. I do not view government as an exemplar of excellence, efficiency, responsiveness to evolving conditions, innovation. I think that in many situations, business practice must be guided by situational specific circumstances, and a static rule applied across all businesses -- big and small, mass production versus one-of-a kind products, high technology versus low technology, unskilled versus highly educated -- is likely to have bad effects in some circumstances.
first in line shoutld be themselves for a cut and cap!
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John Adams “The moment the idea is admitted into society that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence.”
Ronald Reagan: 'Everybody that is for abortion has already been born'
"I never said I was worth it. I only said I wouldn't do it for less " William F. Buckley Jr.
I don't know what the content of these guidelines may be. What is said about them makes some sense (link executive pay to real performance and realign the performance parameters to long term versus short term results). But notwithstanding, I am very averse to the idea of government dictating to business. I do not view government as an exemplar of excellence, efficiency, responsiveness to evolving conditions, innovation. I think that in many situations, business practice must be guided by situational specific circumstances, and a static rule applied across all businesses -- big and small, mass production versus one-of-a kind products, high technology versus low technology, unskilled versus highly educated -- is likely to have bad effects in some circumstances.
What do y'all think?
I absolutely agree with you that government should not be running businesses and dictating employment terms to private businesses. On the other hand, in connection with loaning working capital to businesses, lenders in the private sector regularly dictate a variety of financial terms, including limits on executive bonuses, etc. FM... I'm not sure this is a Constitutional issue, but, rather a contractual one.
On the other hand, in connection with loaning working capital to businesses, lenders in the private sector regularly dictate a variety of financial terms, including limits on executive bonuses, etc.Â* FM... I'm not sure this is a Constitutional issue, but, rather a contractual one.
Part of my concern is how government can extend its reach beyond the explicit contractual obligations you mention. Because of the footprint government -- federal, state, and local -- there is a huge portion of the business community that does business with the government. To some extent I see this control being insinuated through the backdoor. It could be a matter of "don't do any business with a public entity lest you unknowingly sign on for a lot of baggage that isn't written up in the contract!" Maybe this has long been the case.
I feel that I agree that our economy and companies suffer from focusing on the short term. I almost feel this is a cultural issue, and that it would just be best if these executives had stronger moral character and better upbringing than to sell themselves out to shareholders and boards of directors, doing everything for the next quarter results and not thinking about what the consequences are for the next year or the next five years. This is not, I think, how business is conducted by Samsung, Philips (electronics company, full name eludes me), and Toyota. But as in most cultural things, government is not a good vehicle for driving cultural change, and in fact for most people it is abhorrent to see government driving cultural change. For example, clearly some of the low hanging fruit of education reform would be directed to changing cultures of low performing students and low performing schools, but this is a sticky wicket that no one is willing to attempt to wield.
I don't know what the content of these guidelines may be. What is said about them makes some sense (link executive pay to real performance and realign the performance parameters to long term versus short term results). But notwithstanding, I am very averse to the idea of government dictating to business. I do not view government as an exemplar of excellence, efficiency, responsiveness to evolving conditions, innovation. I think that in many situations, business practice must be guided by situational specific circumstances, and a static rule applied across all businesses -- big and small, mass production versus one-of-a kind products, high technology versus low technology, unskilled versus highly educated -- is likely to have bad effects in some circumstances.
What do y'all think?
I absolutely agree with you that government should not be running businesses and dictating employment terms to private businesses. On the other hand, in connection with loaning working capital to businesses, lenders in the private sector regularly dictate a variety of financial terms, including limits on executive bonuses, etc. FM... I'm not sure this is a Constitutional issue, but, rather a contractual one.
I understand your point Ipsc but unfortunately what's being put out there is just a ruse. They claim its in repsonse to the tarp funds but on many cases have stated, they are going beyond those limits. They don't plan on being constrained by just those recieving bailout money. As Alsatain has pointed out, anyone doing business with the Federal Government will fall under this catagory but even that won't stop them making up new unconstituional rules.
My question, who will stop them? What's to stop them now? We are living in a soft tyranny state right now.
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John Adams “The moment the idea is admitted into society that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence.”
Ronald Reagan: 'Everybody that is for abortion has already been born'
"I never said I was worth it. I only said I wouldn't do it for less " William F. Buckley Jr.
Executive compensation controls?
