Executive Pay and Your Government
One of the current Hot Topics is how Barack Obama wants to regulate executive pay at private companies as stated here in the Chicago Tribune.
The whole concept has capitalists up in arms. Now the Obama administration claims it is only for companies that take federal bailout money during hard times we have to ask ourselves this. Once the government claims a toe hold on some aspect of public life do they ever let it go or do they try to take more ? Democrats for sure are the worst culprits in this type of a scenario, they would love to have every one in the U.S. sucking off the government teat so they can control us as the sheep they believe us to be.
I almost want to agree with the Obama regency that this would be a good policy but you have to wonder just how far could the government push the law. Here’s a fallacious and intentionally hyperbolic possibility. A professional sports team wants to locate in your area, they will not do this unless they get tax incentives and financial assistance to build a new billion dollar stadium. So the government issues a bond and maybe tacks on a half percent to the local sales tax to raise the money. Now officially the sports team has accepted government money so does that mean the government can set all the salaries for the highest paid team associates ? I believe the law would say YES !
Do a quick internet search under Obama Limits Executive Pay and you will get a few hundred thousand hits. Unfortunately many are only discussing the issue and protesting the audacity of Obama to even consider this a viable solution. Although I don’t read anywhere of anyone offering any kind of actual solution. So me being me, here is my solution to the executive pay conundrum.
CEO compensation packages are disgusting, not in the amount of pay but based on pay for performance. Being paid a few hundred million over the course of two or three months whilst driving a companies stock into the toilet is unacceptable.
First of all CEOs and all corporate executives should be prohibited from owning or trading the company stock in any way. I know the concept behind this is that the CEO will perform well increasing stock value and reaping a reward for their actions and in an ethical world this would work. The reality is that execs manipulate the financial reports artificially elevate stock prices and cash in on a bogus wind fall. So the solution is to bar them from being shareholders, they now have no incentive for creative financing.
Next give them a base pay just like any other salaried worker. Say $20,000.00 to $40,000.00 per month. This is something they will earn no matter what and if they turn out to be idiots and can’t perform there is no big payout when they get canned.
Finally, they get the end of the year bonus based on a percentage of taxes paid on claimed profits. This could be any amount theoretically and even vary from 1% to 100%. Example: A company claims $1 Billion in profits of which they pay $300 Million in taxes (combined state and federal) the CEO is then eligible for a bonus equal to a percent of that $300 Million be it the 1% $3 million or the 100% $300 Million.
With this scenario the CEO gets a tidy sum, the shareholders realize growth and the government gets a nice chunk of change as well. Another benefit is that creative accounting practices, devised to claim losses instead of profits to avoid taxes, will go away as the execs will want to pay the highest amount of taxes they can so their own pay packages improve.
This is a very simple solution to a very complex problem and although my figures are purely theoretical, they would work.
thanks for reading and please leave a comment
patriotranter
