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It's time for a change, alright...

By
Home Builder with Jesse Clifton & Associates AREC License #15292
Well, let's just light my fire first thing this morning. One of the first articles I happened to read this morning was from Reuters.com; a story in which the esteemed Senator from Illinois is pushing "for passage of a bill to put huge pay packages of some U.S. corporate executives under greater scrutiny."

Dubbed the "say on pay" legislation, the bill would provide corporate shareholders more of a voice in setting executive compensation packages. Senator Clinton has apparently jumped on the bandwagon as well, citing concerns over the "outrageous" pay some CEO's are receiving.

The bill would require corporate boards to submit the compensation packages to shareholders for an annual non-binding vote. The purpose is to force boards to disclose the rationale behind the offered CEO compensation package. Senator Obama is quoted as saying "... It's about changing a system where bad behavior is rewarded so that we can hold CEO's accountable..."

There's that "change" mantra again.

Pardon me, but who the devil put Senator Obama, or for that matter, the US Congress, in charge of holding corporate CEO's accountable? Isn't that the role of the Board of Directors, and by equal measure, the company shareholders?

Obama and Clinton have cited Cayne and Schwarts of Bear and Mozilo of Countrywide as prime examples of corporate CEO's who were overcompensated by their respective boards. In hindsight I agree they were overpaid based solely on their performance but the compensation they, and others like them, were offered was commensurate with their abilities. Thus is the way of life in corporate America. Education, background and abilities with perhaps a dash or two of cronyism, all come to play when trying to recruit and/or retain top tier talent.

The folks who have the power to rein in 'run away' CEO compensation packages are the folks who have always had the power to rein in 'run away' corporate CEO packages. They are the shareholders. Investors, however, are generally blinded by stock performance and rarely exercise the power they have because of the returns they anticipate receiving.

When, in the case of Mozilo or Cayne, their performance is damaging to investors, let the investors resolve the issue through the severance of the CEO's relationship with the company. Let the investors of such companies bring pressure to bear on the boards to craft employment contracts that reflect the will of the majority. Poor performance negates the company's obligation to pay highly coveted bonuses or where gross negligence is concerned, the board has the ability to terminate any 'bloated' severance package benefits.

Be warned, however, careful consideration is required when crafting CEO compensation packages. Corporations are for profit entities; attracting the best and the brightest requires the offering of commensurate compensation. Let's face it; it takes more than a modicum of intelligence and ability to run a multi-billion dollar corporation.

It is time for a change; it's time to tell Uncle Sam to sit down, shut up and let the free markets work. More bureaucratic 'help' from the government is just what we (don't) need.


Jesse & Kathy 

Clifton, Spouses Selling Houses - Fairbanks, Alaska Realtors

Jesse & Kathy Clifton, better known as 'The Spouses' are full time Realtors serving Fairbanks Alaska buyers and sellers. They specialize in residential real estate; new and existing construction as well as undeveloped land in Fairbanks, North Pole, Ft. Wainwright, Eielson Air Force Base and Interior Alaska. Visit their website to review the fee market reports designed to keep you updated on the local Fairbanks Alaska real estate market. Have specific questions? Feel free to contact them anytime. They would love to hear from you.

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Comments (18)

Hugh Krone
Weichert Referral Associates - Hamburg, NJ
Realtor, Sussex County NJ
Socialism, socialism, and more socialism, thats what we can expect from an Obama presidency. I wish people would wake up
Apr 11, 2008 05:52 AM
Vickie Nagy
Coldwell Banker Residential Real Estate - Palm Springs, CA
Vickie Jean the Palm Springs Condo Queen
Thanks for the update. This news would probably have passed me by today. I really think that politics and business don't mix well.
Apr 11, 2008 05:54 AM
William Feela
WHISPERING PINES REALTY - North Branch, MN
Realtor, Whispering Pines Realty 651-674-5999 No.
There is a lot of trueth in your post.  to much control will not neccessarily give you the best performance.  But, you would think the shareholders should have more say, but is that what is needed...more people who have NO IDEA of what is really going on making decisions.  We have enough of that at the polls!
Apr 11, 2008 05:57 AM
Jesse Clifton
Jesse Clifton & Associates - Fairbanks, AK

Hugh - I so agree buddy.  It's as clear as day that's where we're headed under Clinton or Obama.

Vickie - Glad you stopped by.  The more that know about this stuff the better. 

William - I agree, many don't know what's going on. All they look at, generally, is performance reports.  It's up to the investors to be aware and demand accountability... it's their money at risk, right?

Apr 11, 2008 11:12 AM
Patrick Johnson
Windermere - Bellingham, WA
unfortunately, most young people don't think about the reality of what politicians say. I remember being in my 20's ( and I used to be a Democrat) and just voting for what sounded good. "Free health care? ya why not?" So when Obama and Clinton go around picking on big corps. or greedy people, it sounds good to someone who doesn't realize that its not part of the governments responsibility to set boundaries for open market conditions. They don't realize that is called socialism. That is why Dems usually have support of younger people, they don't have real world experience and knowledge of how "America" is supposed to work. BTW, why isn't Obama preaching about how much an actor gets paid for a stupid movie?
Apr 11, 2008 12:11 PM
Vern Eaton
Askov, MN
Realtor 651-674-7449
I don't know how people can give their money to some big conglomertion and let them play with it knowing you may not get it all back!
Apr 11, 2008 12:22 PM
» Bill Burress Nationwide Mortgage Originator
» Bill Burress Nationwide Mortgage Originator - Fort Myers, FL

Jesse and Kathy:

It only makes sense that this pinko commie would want to limit free enterprise and squelch capitalism.

Apr 11, 2008 12:24 PM
» Bill Burress Nationwide Mortgage Originator
» Bill Burress Nationwide Mortgage Originator - Fort Myers, FL

Jesse and Kathy:

Congratulations!

This post has earned featured post status on the Silent Majority group in ActiveRain.

 

 

 

 

 

Apr 11, 2008 12:25 PM
Broker Nick
South Florida Real Estate & Development, Inc. - Coconut Creek, FL
Broker Nick Relocation Broker Service

Socialism and her ugly twin sister Communism hiding behind a group called liberals in America.

Apr 11, 2008 01:09 PM
TeamCHI - Complete Home Inspections, Inc.
Complete Home Inspections, Inc. - Brentwood, TN
Home Inspectons - Nashville, TN area - 615.661.029
Jesse, I don't know what Clinton is bitching about. Since Bill left office, they have made over 100M. She needs to put a cork in it.
Apr 11, 2008 08:44 PM
Owen Zweiback
Realty World Florida - Bonita Springs, FL

I'm with you Nicholas.

Obama and Clinton are communists and so are most of the Democrats in the Senate.

By the way, get ready for a Clinton Senate Majority leader when she looses to Obama.

This get's scarier by the minute.

Apr 12, 2008 06:55 AM
Mesa, Arizona Real Estate Mesa Arizona Realtor
Homes Arizona Real Estate LLC - Mesa, AZ
AzLadyInRed

This is definitely THE time to watch what is going on and be familiar with what the candidates stand for. NEVER, ever liked Hillary - or Bill for that matter (no morals), and though O'Bama has charisma thereby making is easier for the other Dems to vote for him, it is dangerous to just hope that things will turn out alright. Good and informative and up to the minute post. ;-)

Pepper

Apr 12, 2008 08:17 AM
Linda Scanlan
A Fan of AR - Burleson, TX
Jesse, you are sooo right! I'm tired of Congress trying to legislate big business. They can't get a handle on the money we "entrust" them with..why do they think they can help businesses?? How can they possibly think they have a say in the boardrooms of America? You're right..it's stockholders and shareholders who should hold these executives accountable.
Apr 12, 2008 08:58 AM
Doreen McPherson
Homesmart ~ Scottsdale ~ Tempe - Tempe, AZ
Phoenix Arizona Real Estate ~
Right on!  If the government had a clue about running a business we wouldn't be up to our ears in debt running  a deficit with no end in sight.  
Apr 18, 2008 08:53 PM
Kathy Fisher
Parker Properties - Decatur, TX
Realtor Wise County Texas

Okay, ever political post needs a little humor. Here is a break from the serious side. Please don't take offense, JUST LAUGH!

I live in really small county in North Texas. One of the main eateries here in town is the "Chicken Express" fast food place. They have a HUGH marquee sign that can be seen for miles before you get into town. They decided to lighten everyone up this past week and posted the below sign.

Hillary Special

 

Ya'll have a great weekend and just remember...WE NEED TO PRAY THE VOTE! God Bless us everyone and GOD BLESS THE USA!

Apr 19, 2008 01:01 PM
Broker Nick
South Florida Real Estate & Development, Inc. - Coconut Creek, FL
Broker Nick Relocation Broker Service
Good one Kathy.
Apr 19, 2008 01:07 PM
Jesse Clifton
Jesse Clifton & Associates - Fairbanks, AK

Patrick - Good to see you came around to the right side. :)  Some people know how America is supposed to work, but are just too darn lazy to care. 

Vern - I think about it all the time but I've at least done a modicum of research to know who has our money and what they're doing with it.

Bill - I agree.  The Dems do seem to love socalism, don't they?

Thanks for the feature, btw!

Nicholas - That would be Barack and his ugly sister Hillary. :)

Michael - I'm telling ya... the last thing these two cons need to be doing is bitching about corporate America... esp when they're putting money into their overstuffed pockets.

Owen - Clinton as SML?  I hadn't thought about that.  Now that would be ugly... but could it be worse than Pelosi? 

Teri - It's definitely going to be an interesting wrap up... this is almost more entertaining than the general election.

Linda - I don't know what they're thinking.  You're right though... they can't manage what they have... why on earth would we want them regulating the boardrooms? 

Doreen - You're right on the money!

Kathy - LOL - Thanks for the humor. 

Apr 19, 2008 03:11 PM
Trey Thurmond
BCR Realtors - College Station, TX
College Station , Texas Homes

You tell them brother!

Everything you are saying mirrors my thoughts.

Apr 19, 2008 03:14 PM