There is no greater a critic of corporate abuse than yours truly. And by political standards, a somewhat left-of-center critic, at that.
But when it comes to CEO pay, it’s about common sense, not politics.
CEO pay, as outrageous as it may at times appear, is between a public company and its shareholders — not politicians who know a juicy topic when they see it.
If investors don’t like the compensation structure of a company, which is available in detail in the annual proxy and in sometimes hard-to-find employment contracts that are exhibits to SEC filings, they don’t have to buy the stock. It’s really that simple.
If they think the compensation structure is egregious, they can become active and kick out management and the board. It’s really that simple.
If they think shareholders should have more of a role, they can try to push the company the way of Apple (AAPL), Aflac (AFL) and many other companies, where “Say on Pay,” which puts shareholders in an advisory role, has become the new world order. (It’s not perfect, but it’s better than nothing. And it’s really that simple.)
So, here we have the Congressional Committee on Oversight and Government Reform, grilling current and former execs of Citigroup (C), Merrill Lynch (MER) or Countrywide (CFC) in a hearing on CEO Pay and its relationship to the mortgage mess.
What does CEO pay have to do with the mortgage mess? Zero. What does it have to do with politicians knowing a good hook when they see one? Everything.