I suspect we are going to be distracted by an emerging debate between Congressional Democrats and The White House on how to handle the CEO pay caps written into the economic stimulus bill. This is a distraction because, in all honesty, the pay caps aren’t real.
Today, there is this news in The Wall Street Journal about the pay caps:
As word spread Friday about the new and retroactive limit — inserted by Democratic Sen. Christopher Dodd of Connecticut — so did consternation on Wall Street and in the Obama administration, which opposed it.
The administration is concerned the rules will prompt a wave of banks to return the government’s money and forgo future assistance, undermining the aid program’s effectiveness. Both Treasury Secretary Timothy Geithner and Lawrence Summers, who heads the National Economic Council, had called Sen. Dodd and asked him to reconsider, these people said.
The Associated Press has a similar story:
Two top lawmakers on congressional committees that oversee financial regulations appeared to dismiss the possibility that the administration would not follow the compensation requirements.
"Mr. Gibbs may not like it, but it is going to be enforced," Rep. Barney Frank, chairman of the House Financial Services Committee, said on CBS. "This is not an option. This is not, frankly, the Bush administration, where they’re going to issue a signing statement and refuse to enforce it. They will enforce it."
Sen. Richard Shelby, the ranking Republican on the Senate Banking, Housing and Urban Affairs Committee, said the compensation provisions were necessary to protect taxpayer money. Of Gibbs’ comments about the provisions and their enforcement, he told CBS, "It seemed to me that he was waffling a little bit."
"This provision in the stimulus bill is going in the right direction," he said.
The problem is that if what the pay caps are supposed to do is limit the haul CEOs take, this isn’t going to do it (and isn’t the support expressed by Shelby a hint that this is not a heavy burden?). And so we should not be drawn into the distraction this tiff is going to create. Here is why:
First, I do want to make clear that I am all for reducing the overall compensation for CEOs who have legally looted corporations to the tune of hundreds of billions of dollars over the past couple of decades. And Dodd’s amendment did improve on the original Geithner/Treasury Department proposal by extending the cap to more higher-ranking executives, imposing a "clawback" feature (meaning, we can demand a refund on pay given to executives if they lie or misrepresent earnings or revenues–a common occurrence in the age of CEO greed) and instituting a "Say on Pay" or an annual shareholder vote on approval of executive compensation (you can read the provisions’ main components in Dodd’s statement).
But, Dodd makes the mistake the Treasury Department made–as I pointed out in a look at the Treasury proposals, in many ways, the real money CEOs pocket comes in massive pensions that are quite often much bigger than the sum total of the pay and benefits CEOs earn when they are working. In fact, at some banks the pensions given to CEOs exceed the pensions of the rest of the entire workforce. And neither Dodd’s proposal nor the Treasury’s proposal address pensions–at all.
There is a similar problem with the "Say on Pay" provision. As I mentioned, it’s rare to have shareholder votes go against management simply because the majority of shares are usually controlled by those running the show.
None of this means we should not impose the pay caps, at the very least because it’s a good political organizing moment to keep the scope of the greed in the public eye.
BUT…let’s not mistake that for stopping the ability of CEOs and top executives to legally loot their companies–looting that means that there is less money left in the corporate till to pay for decent wages and fair pensions for regular workers, the people who really make a company profitable.
This is about power and how power is distributed in a corporations.
For that reason, I renewmy suggestion made two weeks ago (hey, a guy can be persistent and hope, no?): all banks and other folks who get taxpayer money through the Troubled Asset Relief Program (TARP) or any other financial bail-out must agree to be neutral in union organizing campaigns.
Neutrality is really the most important factor in union organizing campaigns. You get that in this industry and you would likely be able to unionize tens of thousands of workers in this largely non-union sector–and that, my friends, would be of longer-term value in making sure workers got their fair share.
