Feeds:
Posts
Comments

Archive for the ‘Executive pay’ Category

Europe is in shambles. Nations are going bankrupt. There are riots in the streets. So you would guess that the folks at the European Commission are focused on some big issues.

But you would be wrong.

The eurocrats in Brussels have much bigger fish to fry. They’re addressing the unmitigated horror of inadequate female representation in corporate boardrooms and contemplating continent-wide quotas.

I’m not kidding. Here are some excerpts from the New York Times report.

Frustrated that her previous efforts to get more women into the top echelons of European business have not yielded stronger results, Viviane Reding, the senior justice official in the European Union, was to announce a new effort Monday that could result in legislation requiring that women occupy up to 60 percent of the seats on corporate boards. …E.U.-wide rules were now needed, she said. “Personally, I don’t like quotas,” Ms. Reding said. “But I like what the quotas do. Quotas open the way to equality and they break through the glass ceiling.” Countries that have quotas “bring the results,” she said. Ms. Reding has long campaigned for major changes in European boardrooms and had given industry “a last chance” to improve its record on placing women in top management.

Isn’t that nice. She doesn’t like quotas, but she has no choice because she gave industry a “last chance” to engage in gender bean counting and they didn’t comply.

I wonder if it’s ever occurred to this über-bureaucrat that it’s not her job to tell private companies who to hire, fire, or promote?

"Nice business you have, shame if anything happened to it"

As an aside, the New York Times manages to demonstrate its bias by directly implying that “genuine equality” only exists if boardrooms have equal numbers of men and women.

Having now concluded that self-regulation has failed, Ms. Reding has set her sights on legislation that could, if enacted, drastically speed up a revolution in the position of women in the workplace that began many decades ago but has so far failed to deliver genuine equality in many areas of business.

Has it ever occurred to the reporter that “genuine equality” exists when everyone has an equal chance and government doesn’t put a thumb on the scale? But regardless of what he thinks, doesn’t good journalism mean keeping his opinions to himself?

Maybe I’m just too old fashioned.

Let’s return to the meat of the story and the actions of Ms. Reding. In this passage, I like how she blames “society” because companies didn’t kow-tow to her voluntary suggestions.

In the announcement to be made Monday, Ms. Reding will call for a new round of consultations with governments, trade unions, companies and civil groups. The move comes a year after she called on companies to take voluntary steps to increase the representation of women on boards to 30 percent by 2015 and to 40 percent by 2020, by replacing departing male directors. …Ms. Reding said that the severe economic downturn in Europe that has pressured companies to focus on their bottom lines was not responsible for the failure of her voluntary initiative. “It is really a question of society,” she said.

The story continues with discussion of the onerous plans being concocted by Ms. über-bureaucrat.

Ms. Reding said that the consultations, beginning Monday and ending on May 28, would determine the proportion of women that should be on boards under any E.U.-wide legislation; whether quotas should apply to state-owned companies as well as publicly listed ones; whether both executive and nonexecutive boards should be covered by the rules; and what sanctions should apply to companies that do not meet the objectives, and if there are circumstances where exceptions are necessary.

Unfortunately, the private sector in Europe has the same cringing approach as their counterparts in the United States. Instead of boldly saying that corporate boards are a private matter for shareholders to decide, representatives from big companies accept the intrusion and merely complain about implementation.

…the European Round Table of Industrialists, a forum for the chairmen and chief executives of major multinational companies, has warned that big divergences among sectors and national traditions meant any measures should remain voluntary. “Societal changes take time,” said Carlo Bozotti, the chief executive of STMicroelectronics, a semiconductor company, and the head of a group at the Round Table looking at the issue. “There is no one-size-fits-all solution for industrial companies from multiple sectors, of various structures, and from diverse cultural backgrounds,” he said.

The article concludes with an assertion that “gender-diverse” boardrooms lead to better economic performance. That may very well be true, but it suggests that shareholders are deliberately sacrificing income and wealth in order to retain something akin to an old boys’ network. That seems rather implausible, to say the least.

There is plentiful evidence from business consulting firms including McKinsey & Co., and from Catalyst, a nonprofit research group, that companies with gender-diverse management teams experience higher growth in their share prices, better-than-average operating profits, and outperform their rivals in terms of sales, return on investment capital and return on equity, according to the report. That research showed that women asked more questions and made fewer reckless decisions, proving that “women are not a cost, women are a benefit,” Ms. Reding said.

I want to close with a semi-optimistic note. As crazy as it is for Ms. Reding to try to dictate the number of men and women in corporate boardrooms, at least she’s not complaining about discrimination based on looks or height and trying to get government involved in those areas. At least, not yet.

Read Full Post »

Even though politicians already have flushed $400 billion down the rathole, the Obama Administration has announced that it will now give unlimited amounts of our money to prop up Fannie Mae and Freddie Mac, the two government-created mortgage companies. While President Obama should be castigated for this decision, let’s not forget that this latest boondoggle is only possible because President Bush did not do the right thing and liquidate Fannie and Freddie when they collapsed last year. And, to add insult to injury, Obama’s pay czar played Santa Claus and announced that that a dozen top “executives” could divvy up $42 million of bonuses financed by you and me. Not a bad deal for a group of people that more properly should be classified as government bureaucrats. Here’s an excerpt from the Washington Post about the Administration’s latest punch in the gut for taxpayers:

The Obama administration pledged Thursday to provide unlimited financial assistance to mortgage giants Fannie Mae and Freddie Mac, an eleventh-hour move that allows the government to exceed the current $400 billion cap on emergency aid without seeking permission from a bailout-weary Congress. The Christmas Eve announcement by the Treasury Department means that it can continue to run the companies, which were seized last year, as arms of the government for the rest of President Obama’s current term. But even as the administration was making this open-ended financial commitment, Fannie Mae and Freddie Mac disclosed that they had received approval from their federal regulator to pay $42 million in Wall Street-style compensation packages to 12 top executives for 2009. The compensation packages, including up to $6 million each to Fannie Mae and Freddie Mac’s chief executives, come amid an ongoing public debate about lavish payments to executives at banks and other financial firms that have received taxpayer aid. But while many firms on Wall Street have repaid the assistance, there is no prospect that Fannie Mae and Freddie Mac will do so.

Read Full Post »

Not many people are willing to defend generous pay packages for CEOs, so I got tapped to appear on both the ABC and CBS morning shows. I prefer the CBS clip, in part because they had a nice set, but it is always frustrating to do interviews for the network shows because you talk for 10 minutes and they use 10 seconds. I understand why they have to use that approach, but it means there is not much ability to make a thorough argument – which is important for those of us who want to defend market forces in general but don’t have much sympathy for executives of the companies that are putting their snouts in the public trough.

I recommend this post at the Cato-at-Liberty blog for those who want a more complete analysis of the issue.

 

Read Full Post »

I rarely feel conflicted on issues, but I’m not sure what to think about compensation limits for executives at banks that have received bailouts.

On one hand, it is incredibly destructive for the incompetent and venal politicians and bureaucrats in Washington to interfere with private compensation decisions.

On the other hand, companies that are sticking their snouts in the public trough are no longer real private entities. And if we want to discourage more firms from trying to fleece taxpayers, I suspect there are few things more effective than threatening the salary of the CEOs and other top executives.

I’ve been doing a lot of media on this topic. As you can see from this CNBC clip, this is a tough issue to handle, though I always try to make the one clear point that the entire problem could have been averted by not doing bailouts in the first place.

Read Full Post »

I had to miss part of Cato University for this, so I hope it was worthwhile.

Read Full Post »

Follow

Get every new post delivered to your Inbox.

Join 2,511 other followers

%d bloggers like this: