Secretary-Treasurer Trumka: Here’s What Ails Corporate America

[Omaha Steve]

http://blog.aflcio.org/2008/03/21/afl-cio-secretary-treasurer-trumka-heres-what-ails-corporate-america/

Patrick O’Meara, corporate finance specialist in the AFL-CIO Office of Investment, highlights a CNBC discussion by AFL-CIO Secretary-Treasurer Richard Trumka on the need for making it clear that excessive CEO pay plays a key role in our nation’s credit crisis.

In a recent appearance on CNBC, AFL-CIO Secretary Treasurer Rich Trumka explained how the issue of excessive executive pay must be front and center in any honest discussion of the causes of the credit crisis now threatening the health of our economy. If CEOs are rewarded for putting at risk our companies—and, as we now see, even our financial system—they will not hesitate to do it. Shareholders and government regulatory agencies need to be able to make sure that CEOs are not given the wrong incentives.

http://www.cnbc.com/id/15840232?video=688935503


As Trumka notes, shareholders at many companies are now submitting resolutions asking that shareholders be given a say on pay, that is, a vote on whether they approve the compensation packages of the top executives.

But he points out this is not enough, because these votes are only advisory. What really is needed to fix corporate culture is proxy access. This is another way of saying that shareholders should be allowed in practice, not just in theory, to pick directors who really will look out for shareholder value and the long-term interests of the company. Right now, the system is rigged so that the status quo cannot be changed.

There also is a need for a thoughtful reregulation of the financial sector, Trumka points out. This does not mean the government needs to put corporate activity in a straightjacket. But time and again, the leadership at corporations has shown it is incapable of regulating itself. We do not need to keep learning the same lesson over again. Some regulation, especially with respect to CEO pay, is in the best interest of everyone. We want the people running our companies to be talented, but we also need them to be willing to play by the rules.

[tbyg52]

1. Absolutely!

As it stands now, the CEO's (or lots of them, anyway) are just getting away cold with the bags of money. I keep picturing the tycoon on the Monopoly box.....