Limiting CEO pay must be in the air! I posted a blog with such a proposal on Saturday, before learning that Senator McCaskill had introduced a bill with similar provisions on Friday. Then yesterday President Obama himself announced executive pay limits, along very similar lines as my own "modest proposal." (Do you think the Prez reads my blog?!!).
According to the New York Times story, these executive pay limits "seek to alter corporate culture" which in my view is long overdue and would be a major accomplishment. According to the Times, "the new rules would set a $500,000 cap on cash compensation forthe most senior exeutives, curtail severance pay when top executives left a company,[and] restrict cashing in on stock incentives until government assistance was repaid."
President Obama observed that "This is America" and "We don't disparage wealth" or people achieving success. But "what gets people upset--and rightfully so--are executives being rewarded for failure. Especially when those rewards are subsidized by U.S. taxpayers."
"For top executives to award themselves these kinds of compensation packages," the President said, "in the midst of this economic crisis is not only in bad taste, it's a bad strategy, and I will not tolerate it as president." He pointed to this kind of CEO extravagance reflecting "a culture of narrow self-interest and short-term gain at the expense of everything else."
Bravo, Mr. President. This may be mostly a symbolic gesture, but symbols are important. What this country needs now, even more than an economic stimulus package, is a change of heart, and a change in the way we think, believe and behave. Just as when the President said "The United States does not torture," he is sending a message to Americans and to the rest of the world that the United States is changing.
(See my previous entries on CEO pay by clicking on the "CEO pay" label in the right sidebar).
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