Should the business people who killed the golden goose of the world economy by force-feeding it “exotic” financial instruments be rewarded for their efforts with multi-million dollar bonuses? Perhaps prosecution would be a more fitting reward. No indictments appear to be forthcoming, but at least the federal government has taken steps to allow the shareholders of government-supported companies to trim bonuses.
According to Time magazine, “investors this year have asked for so-called ‘say on pay’ at some 100 companies, including Coca-Cola, IBM, General Motors, Exxon Mobil, Citigroup, Anheuser-Busch, General Electric and Wal-Mart. [And] some 70 different institutional investors will be pushing to add an annual provision to let shareholders vote up or down on how companies pay their top five executives.”
Several hundred banks and other types of financial companies that received bailout money from President Obama’s Troubled Asset Relief Program, or TARP, are now required to allow their shareholders to vote on bonuses and pay packages for top executives. All these companies knew they were in for some extra regulation until such time as they paid the Treasury back its billions. Now here it is.
The Treasury Department outlined the new regulations on its Web site after legislation on the issue recently was passed in Congress.
“We think this is an amazing leap forward for say on pay,” Lisa Woll, executive director of the Social Investment Forum, a trade association for socially responsible investment firms, told a reporter from Business Ethics magazine. “We believe it also changes the context of the discussion and adds significant pressure on other (non-TARP) companies to implement the advisory vote.”