Saturday, 31 January 2009

McCaskill's Dream

This was the week that Missouri Senator Claire McCaskill stood up, and said she was really upset....demanding that Wall Street executives ought to have limits on some of their salaries. Her idea? She wants to force companies taking federal bailout money to limit compensation for any employee to what the president of the United States currently earns: $400,000 a year. As she said: “Is that so unreasonable? It’s eight times the median household income in the United States of America. I don’t think that sounds like a bad deal.”

There are two ways of looking at this. First, you have company boards now, which are very willing to hand out $20 million or even $200 million...to have "their" CEO onboard. In most cases, the board is the one controlling this method of "madness" (if it even is madness). If you dug into the board members...you'd find that most companies in the big-boy range are paying the board folks around twenty-five percent of whatever they are paying the CEO (exception to the $200 million guys). Salary madness is a problem, but then when you enter a candy store...are you capable of controlling your urges and only buying what you came to buy?

The second way of looking at this....is that the CEO is chiefly responsible for the success or failure of a company. A real leader, will boldly make decisions and push profits to a higher margin. We can all look over at Enron and suggest that they hired a guy who understood nothing about business, and he was there for cosmetic reasons only. But then we could turn around to any number of other businesses in the US...where the CEO is the driving force of the company.

Frankly, if the Senator's idea is so good...why not limit everyone to the president's salary? Why are we paying a second-rate relief pitcher for the Yankees $6 million a year? Why are we letting CBS pay a second-rate journalist millions a year to run the nightly newscast but she really doesn't draw anyone (yes, Ms Couric). Why do we have experts for think-tanks in the US drawing a $1 a year....to mostly stand ready to answer questions on CNN while a major event occurs?

What would happen if the Senator gets to play ball and insert this into law? You'd watch one of two things occur. Either a mass number of CEOs would simply retire and you'd find only a limited number of folks who'd want to be a CEO at that range of pay....meaning you got a second-rate guy running a company and helping to dissolve it one way or another.....or you'd have companies refusing government help or bailout, then bankrupting themselves in a honest American sort-of-way. You might actually have Senators weeping on TV about a massive American economic downturn and offering trillions of dollars to companies...and they refuse to accept the package deal because of the pay deal.

Just another night in America.

No comments: