Shareholders To Get More Say On Executive Compensation?
That’s the plan, but color me skeptical. These corporations have too much influence on Capitol Hill. Still, the fact that we’re even talking about it is encouraging.
CNN explains why this issue has reignited…
Two weeks ago, Goldman Sachs (GS, Fortune 500) was roundly panned amid speculation that it was considering paying its employees some of the largest bonuses on record, despite having accepted $10 billion from the Treasury Department’s Troubled Asset Relief Program, or TARP, last fall. (The investment bank has paid the government back, however.)
Earlier this month, outrage over bonuses paid out by bailed-out insurer AIG (AIG, Fortune 500) bubbled back to the surface after The Washington Post reported that AIG was seeking the government’s consent to make a scheduled performance bonus payment of $2.4 million to 43 of its top-ranking executives.
So is this some sort of plot against capitalism?
In fact, a lot of companies have already adopted similar policies of their own accord…
Twenty three companies have agreed to give shareholders an annual vote on executive compensation, including Aflac (AFL, Fortune 500) and Verizon (VZ, Fortune 500), according to the advisory firm RiskMetrics. And more than 80 others agreed to take the issue under consideration at their annual shareholder meetings this year.
Long story short, this is just good corporate governance, and sometimes legislation needs to force certain people’s hands. Unfortunate, but that’s how it goes.