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Congress has no place in boardroom |
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By Dena Battle
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Posted: 03/08/07 07:48 PM [ET] |
It was one of the biggest stories of the week — the Mega Millions lottery hit $390 million. Folks lined up across the nation at ticket machines. New Yorkers gobbled up more than a million tickets per hour. So, it’s interesting that in the same week that winners won hundreds of millions of dollars just for getting lucky, House Financial Services Chairman Barney Frank (D-Mass.) was holding hearings on corporate executives getting paid too much for working.
Let’s view this for what it is: a political stunt to punish entrepreneurs and yet another way for Washington politicians to tell businesses and shareholders how to run their companies. The debate about CEO pay is important. But it shouldn’t take place in Congress. It should be and is taking place in boardrooms and among shareholders.
A perfect example of the market doing its job is the insurance company Aflac. They’ve already announced they will allow shareholders a non-binding vote on executive compensation. Watch for more companies to take the same step or at least put the option up for a vote.
There’s an inherent danger in Washington dictating policy to business owners. The idea that members of Congress would know more about running a business than a corporate board is absurd. When was the last time Congress passed a budget on time and then actually followed it?
Businesses, large and small, are the engine of our economy. When Congress gets involved, businesses get hurt and jobs are lost. Chairman Frank isn’t trying to help businesses — he wants to regulate them under the guise that he’s worried about the average worker and the wage gap.
Let’s face it: If Democrats were really so outraged about the wage gap, they wouldn’t be holding hearings on corporate executives. They’d be even more concerned about Hollywood stars and professional athletes. Basketball star Shaquille O’Neal makes over $27 million a year — that’s $17 million more than the average CEO of the top-earning corporations.
And not only has Hollywood not faced the same scrutiny, it’s been protected from the regulations that corporations have faced. Last year Viacom successfully petitioned the SEC to change regulations that would have forced them to reveal the salaries of their top stars. The rule change kept television networks from having to disclose Katie Couric’s salary, which is reported to be $15 million per year, and Jay Leno’s, rumored to be $17 million annually.
The AFL-CIO website has a calculator with which you can compare your salary to what the average CEO makes. But there’s no disclosure on what John Sweeney, the head of the AFL-CIO, gets paid, or if there are any perks that go with that job. Is Congress worried about that wage gap? Shouldn’t union workers get the same treatment that shareholders get? After all, union members have to pay dues — at least shareholders can sell their shares.
Corporate executives are no different than Hollywood stars, basketball players, mid-level managers and average employees — sometimes they don’t get paid what they’re worth. Haven’t we all worked with someone who we thought was underqualified and overpaid? Paying a CEO too much is just like paying any employee too much — it’s a bad business decision. Do we really think the government is the right entity to decide what people should get paid?
Chairman Frank wants you to think that these hearings are about protecting shareholders, but the remedy already exists for shareholders to demand accountability from corporate leadership — they can and often do sue companies.
Millions of people stood in line last week to buy Mega Millions tickets. The desire for profit and wealth is what motivates our economic system, and earning more is what drives workers to succeed and move up. Congress shouldn’t regulate executive pay any more than they should regulate mid-level managers or entry-level workers.
Think that shareholders deserve a vote on CEO pay? I propose that voters get a vote on how much Congress gets paid. I wonder if Chairman Frank will hold a hearing on that.
Dena Battle is the vice president of policy and government affairs for the Free Enterprise Fund. |
