Yesterday, the Obama team announced that its going figure out a way for increased oversight of executive pay at all banks, Wall Street firms and 'other' companies...to settle this uneven and unfair method of compensation. At least, this is what the New York Times is reporting. The best part of this deal? Its all going to be discussed at the G-20 summit in about two weeks. This is their cornerstone....cleaning up America by taking on the evil executives.
I sat there for a while...looking over this hint of things to come. I pondered, and then it came to me.
First, this is an act which would have to be passed by the senate and house...and that means that a bunch of senators and representatives have to like this idea. At some point in this discussion....some fairly well-off executives are going to approach Senator Tubby, Senator Dimwit, and Senator Don...and kinda let them know that this $80k campaign donation that they gave every few years....is now settle back to $10k. The trips over to the Arizona 5-star resort....canceled. Senator Tubby is going to scratch his head and then realize that his friends are upset. He'll sink back into his chair and realize that this isn't as tidy as the President indicated.
Its very likely that the senate will kill off this idea...but if they don't....and if they really go full speed ahead...then prepare for the 'nuke'.
The 'nuke'? If you were a US company and under some stupid rules on compensation...why would you keep this a US company? Why not pack up and move to Canada? Why not move to Ireland? Why not move to some island in the Caribbean? It'll take a year or two...but I'm guessing that dozens of major companies that fall into the trap....will decide that being a US company just isn't worth the hassle.
At some point...Senator Tubby will then realize that no one from this company that he used to associate with...ever comes around. They party and socialize with a bunch of Ottawa political figures now. They get the $80k donations for campaign funds. And the taxes that the wealthy executives used to pay? Well...it goes to Canada now.
By fixing the problem...we really helped to fix the mess...by encouraging them to leave. In the long run....this does ensure that we never have an executive pay problem ever again....but then we don't have that many major US companies either.
Just something to think about.