Dean Baker discusses the buzz saw whiplash coming from following this spin: shareholders can not be trusted to ste CEO copmensation becuas etehy don’t have the right interests in mind. OOOOOOOKAYYYYYYYY.
Beat the Press
Representative Barney Frank has proposed a law that would require corporations to have non-binding polls of their shareholders on CEO compensation packages. According to Marketplace Radio, the opponents of this measure claim that shareholders have diverse interests and aren’t in a position to properly assess CEO compensation.
It would be helpful if the media teased this one out a bit further — the shareholders aren’t qualified to determine the pay of their top employee, but the insiders (a corporate board that usually owes their position primarily to the CEO) somehow can be trusted to act in their interest.
The original marketplace story has the full quote from Barney:
BARNEY FRANK: This lack of confidence in shareholders when it comes to CEO compensation greatly contrasts with what we’re told we should impute to shareholders on every other issue.
That seems like a polite understatement. Intellectual property strangleholds, rolling back Sarbanes-Oxley, high CEO pay(!), stock options, the “free”trade agenda, and widespread outsourcing for low labor costs are all justified on behalf of shareholder interests.
Baker also rightly calls foul on the notion that this is government interference. Hogwash. Corporations are creatures of government policy, as are all coporate governnace rules. This is a question of the best rules for corporations.
Oh, and the supposed perfection of outcomes in markets of heterogeneous actors (as in, diverse interests), that, you know, wisdom of crowds idea, well, F$#! it.