contrarian@coalmine

Executive Compensation: Common Sense, Not Politics

Hey Herb,

What's really wrong with the government mandating salary caps or proposing formula's which limit the amount of money that top management can siphon from publicly traded companies? Can't we just agree that man, left on his own like a boy in an unattended candy shop, is greedy; and that that the "public" owners of these publicly traded companies, as opposed to their private enterprise counterparts, must be protected from unchecked greed? Why is this thought process always tossed away as be un-American, anti-Free Market, or worst. Why do intelligent people always hide behind the phrase "If investors don’t like the compensation structure of a company...they don’t have to buy the stock. It’s really that simple."

I've watched back-to-back CEO's abruptly removed from office (via death, illness, or misconduct) at McDonald's and Boeing without a pause in productivity, while their stocks performed extraordinarily afterwards. How important is a CEO at an established utility company, a cyclical industrial, or a huge service company? If all the electric utility company CEO's disappeared into a void tomorrow would the lights still come on in our homes? If salaries and bonuses at Wall Street's publicly traded companies were slashed across the board, would brokers,traders, and deal makers continue to get out of bed and go to work? I think so.