As firms begin to disclose last year's bonuses ahead of annual shareholder meetings, it is becoming clear that companies across a wide range of industries are paying executives in ways that officials worry will not discourage the kind of excessive short-term risk-taking that led to the financial crisis.
Ol' greed-'n'-steal are back in corporate America. It's beginning to look as though people who rise to the top of corporate culture in America are missing the shame gene. The outfit that keeps an eye on corporations, the Corporate Library, sees corporate compensation is no less less worrying than in the past. Nell Minow is quoted as saying "On the contrary, I think pay is worse this year than it's ever been."
Excessive pay packages tend to accompany risky behaviors. When the corporation runs into trouble, shareholders (and the nation) take the fall while corporate managers go home with the gold.
The Washington Post names names. Wells Fargo's CEO is getting what he used to get, times 3. And he's hardly alone. This almost certainly would not happen if the company's owners (you and me -- the shareholders) insisted on some say in what their hired hands receive in compensation.
The Post finds that the congressional proposal giving shareholders some power to determine corporate pay levels has been passed by the House -- but is languishing in the Senate.
Congress and the Treasury Department also required last year that shareholders at the hundreds of firms receiving taxpayer bailouts be able to take an annual advisory vote on how executives are compensated. "Say on pay" is also included in the financial oversight legislation passed by the House last year and in the bill now awaiting action by the full Senate.
But beyond those firms that received bailouts, a multitude of companies -- McDonald's, Johnson & Johnson, General Electric and IBM, to name a few -- are fighting shareholder proposals that would give stock owners a say on executive pay packages.
Waddell & Reed financial advisers, for one, has mailed letters to investors urging them to oppose the resolution.
