Is the ground shifting on soaring executive pay? With markets imploding and people losing their jobs, are politicians finally drawing a line in the sand.
President-elect Barack Obama has slammed "tone-deaf" business leaders who been pulling in hundred million dollar bonuses and taking risks with other people's money. In his interview with Barbara Walters, Obama said: "If you're placed in a position of power, then you've got responsibilities to your workers. You've got a responsibility to your community. Your share holders. That if – there's got to be a point where you say, 'You know what, I have enough, and now I'm in this position of responsibility, let me make sure that I'm doing right by people, and, and acting in a way that is responsible.".
Sounds good. The question is whether any of that translates into action. As Bloomberg's Margaret Carlson says, we can thank Henry Paulson for some of this mess. "What the Treasury is getting now is a stake in a stinking pile of instruments no one can value much less wants to buy. That pile was built by bankers in tailored suits out of Harvard Business School who saw that if they could inflate – and obscure – the value of the mess, they could inflate the value of their bonuses. Lawyers tell me the problem with my revenge fantasy is that there is no law against what's happened. Well, there ought to be. The law is often a step behind because the private sector pays the smartest minds out of the Ivy League to burn the midnight oil thinking up new schemes to print money. The public sector pays small sums to overworked lawyers – some of them emasculated by the no-regulation Bush administration – to try to keep up. Guess who wins?"
Maybe the new President might change things. It's hard to see an Obama administration usurping the fiduciary responsibilities of boards in setting pay. But it will be interesting whether boards will be pressured to set stricter guidelines and stop executives treating shareholders and employees with such contempt.
no comment untill now