BusinessWeek is making the claim that
, "In a striking display of government authority
, pay czar Kenneth Feinberg is taking a knife to the pay packages of certain companies receiving U.S. funds."Hmmmm. Government authority? Doesn't the government actually own the largest share if not the majority interests in those companies? It seems to own GM at the very least: "The U.S. Treasury is the biggest shareholder in the closely held automaker." This government action is not touching any company that it still doesn't have any TARP "investment" in, so is not investing in wholly private companies.As the NYT puts it
, "The pay restrictions illustrate the humbling downfall of the once-proud giants, now wards of the state
whose leaders’ compensation is being set by a Washington paymaster." It says nothing about other companies.This is not government inter-meddling in private business, regardless of what Charles Elson, head of the Weinberg Center for Corporate Governance at University of Delaware's business school, had to say:
"The goals may be admirable, but the approach is atrocious because of the meddling".This is exactly the same kind of governance that allowed Richard Grasso to cream off an exorbitantly obscene pay package from the NYSE. Although many on Wall Street might have thought that package a bit dear, none took significant issue with the manner in which it came about, and he has been able to walk away from the whole controversy with his hands and his money very much in his pockets.It is, in short, governance by the owners.It is the same sort of governance, arranged by antiseptically clean "compensation committees" and other such nudge-nudge, wink-wink consultants who have set the monstrous executive pay packages for years, albeit this time under a bit more scrutiny coming, as it does, from the government.Indeed, considering the way big business generally has handled compensation its own way, the whole current "controversy" makes a complete mockery of this comment by
Espen Eckbo, founding director of the Center for Corporate Governance at Dartmouth University's Tuck School of Busines. "I think we need to create some sort of trust that the board setting of compensation is efficient and non-conflicted."
Labels: Economy, Market regulation