Expert Perspective by Grahall’s OmniMEdia Editorial Board
Articles in both The New York Times “House Approves Limits on Executive Pay” by Andrea Fuller and Wall Street Journal “House Passes Bill to Curb Executive Pay” by Michael R. Crittenden covered the not-too-surprising passage (237 to 185) of a House bill taking aim at executive compensation. “Most lawmakers voted along party lines” with 235 Democrats and 2 Republicans “for” and 169 Republicans and 16 Democrats “against” (NYT).
The legislation would “give shareholders a greater say over executive compensation… [and] require federal regulators to implement rules aimed at preventing financial firms from adopting compensation systems that encourage excessive risk-taking.” (WSJ)
Grahall will watch the wheels of government turn as this bill moves, or doesn’t move, to the Senate. We have had much to say on the two primary issues in this bill, say on pay and executive compensation.
Regarding Say on Pay, on July 12th in our blog titled. “I Think I am Probably Absolutely Sure, Perhaps” we shared: “…shareholders don’t (and probably can’t ever) have access to adequate information to make bona fide decisions regarding compensation, but as the owners of the company they should have that right to make sure executives are not overpaid.” That’s a major problem with Say on Pay.
Recently in our blog “I’ll See You and I’ll Raise You” we discussed the fact that “Companies face a significant and growing challenge. We believe that turnover of top performers will soar when the economy recovers. Basically executives are risk averse when it comes to their jobs and their pay.” And when pay is limited at one organization – for example, a bank with over $1 billion in assets – a smaller patch of green, with a tastier pay package, might be more inviting.
Want to read more? You’ll find plenty on our web site. We’ll bet you’ll gain a perspective that you didn’t have before.
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