Obama Goes After Executive Pay

This is going to be a hard measure to put through, and the arguments against the government doing this are pretty simplistic: what CEO would want to take the risk to innovate now when you know being successful means you'll get your pay capped? We'll drive the best and brightest away from the boardroom!

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.

The outlines of the plan are expected to be unveiled this week in preparation for President Obama’s first foreign summit meeting in early April.

Increasing oversight of executive pay has been under consideration for some time, but the decision was made in recent days as public fury over bonuses has spilled into the regulatory effort.

The officials said that the administration was still debating the details of its plan, including how broadly it should be applied and how far it could range beyond simple reporting requirements. Depending on the outcome of the discussions, the administration could seek to put the changes into effect through regulations rather than through legislation.

One proposal could impose greater requirements on the boards of companies to tie executive compensation more closely to corporate performance and to take other steps to assure that outsize bonuses are not paid before meeting financial goals.

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.

It hasn't occured to a lot of folks on the right that sharing that success with the rest of the company might encourage more innovation, productivity, and loyalty, but as conservatives will tell you, the CEO is the only person in a corporation that actually matters, and it's perfectly fine for that CEO to make thousands of times the salary of their entry level workers.

The only thing unrestricted greed has gotten us here in 2009 is an economy on the brink of failure. Guys like Bernie Madoff and Sir Allen Stanford. Guys more interested in playing the system for maximum personal benefeit than the benefit of their own employees. So yes, if this measure drives these "best and the brightest" away from the corporate boardrooms of America, then Obama's doing us a favor.

"Innovations" like collateralized debt obligations and credit default swaps and subprime loans ruined America, and we'll be paying for it for the rest of our lives. The free market Galt kids were running fast enough to get government bailout money, declaring they were too big to fail.

If you're too big to be allowed to fail, you're too big period.