Panicked Pander

How excited are Americans by the Stimulus Package?
Two weeks ago, 45% supported the plan. Last week, 42% supported it.
Okay. How about now?
The latest Rasmussen Reports national telephone survey found that 37% favor the legislation, 43% are opposed, and 20% are not sure.
In a vote of the people, if we trust the Rasmussen results, the answer to the Pelosi/Obama/Reid plan is a resounding no.
The lack of support is probably a reflection of how impressed we are with the job Congress did on the Wall Street Bailout. And that would explain why Barack went into panicked pander mode yesterday.
President Obama moved Wednesday to rein in the pay of executives whose companies get taxpayer bailout money -- putting a $500,000 cap on annual compensation, limiting "golden parachutes" to departing bigwigs and requiring corporate boards to adopt policies on luxury expenditures such as lavish entertainment and parties.
While having some strings attached to the endless sums of money being entrusted to sleezy tycoons is a good idea, the $500,000 cap is problematic.
By limiting annual pay to $500,000 and dishing out additional pay in restricted stock that can't be cashed in until the government bailout money is paid back, a host of unintended consequences may result, ranging from a brain drain of top talent to a potentially less-generous approach to paying employees at other financial firms.
It is questionable whether a one size fits all approach can work - some companies might not be able to get the leaders they need with salary caps.

One risk of the plan is putting the survival of firms at risk by handcuffing their ability to pay top performers, says compensation consultant Alan Johnson. Some fear executives at banks who take TARP money will go to banks with no pay restrictions.

"The unintended consequence is you end up killing the institution you tried to save," says Johnson. "You drive away the good people.

I have a bigger problem with this approach. It's good politics, because there is huge outrage over corporate excesses, but salary excesses are the symptom, not the problem.

The underlying problem is that our big, publicly traded companies, suffer from a structural problem that has boards of directors ignoring their fiduciary responsibilities to stockholders and instead playing footsie with CEO's.

In a memo written March 4, 2002, Greenspan mounts a scathing critique of corporate governance in America, using simple declarative sentences the public almost never hears from the chairman. "Absent a fundamental change in the perception of the duty to disclose, firms will continue to have incentives to continue to game the accounting system," he wrote. "Changes in critical areas of governance to align CEO interests more closely with those of shareholders in our judgment are essential and, indeed, overdue."

The candidate Obama, who espoused an intent to change the way Washington does business, would have used this moment to attack the real problem. Instead, he's grabbing the cheap opportunity to change the conversation away from flawed appointments in an attempt to lift his sinking young presidency.