THIS IS A STATE ISSUE AND THE FEDERAL GOV’T HAS NO BUSINESS IN MEDDLING IN THE AFFAIRS OF THE STATES!!!

LAISSEZ FAIRE does not work for the interests of the nation – it encourages fraud and abuse of the common investor for the benefit of the wealthy. Justification for this position include the basis for SEC actions, and examples such as Chevron and Carnegie at the turn of the century. Laissez Faire, as you would propose, does not work for the benefit of the nation, the investor, or the participants in the corporation – only the top dogs who take advantage of the rest of us.

omegaram on January 6, 2007 at 7:28 PM

The invisible hand works just fine when everyone follows the rules. What I, and I believe you, want is for the gov’t to step in and be an impartial arbiter. Nobody here is calling for anarchy. We want the legal system to work for shareholders.

Like I said, I hope this is what Frank is proposing and if it is, Cavuto did us a disservice by not getting more details.

omegaram on January 6, 2007 at 7:28 PM

Well, I must admit that you make a compelling argument and I’ll have to defer to it because my knowledge of corporate dealings would fit in a thimble with room to spare.

In my opinion, the issue is that management in many publicly held companies has control or undue influence over the mechanism that controls the major decisions and oversight in those corporations. Those mechanisms are almost impossible to change at present because of the way the corporate by-laws were written and the complicity of the board members.

All Frank (who I not a fan of) is proposing is that federal legislation be initiated to give more control over corporate operations, compensation, and oversight to the people who own the company – the shareholders. Federal legislation is needed because abuse is, I believe, widespread under the the current system and is almost impossible to change because management has undue control over the rules the corporation is run by.

$210 million is only the tip of the iceberg, discussed in detail in the January 4, 2007 edition of the Wall Street Journal referencing the affair with Home Depot and Chairman and Chief Executive Robert Nardelli.

According to Forbes article at http://www.forbes.com/lists/2005/04/20/05ceoland.html Executives at Fortune 500 companies recieved a 54% pay raise last year to the tune of $5.1 Billion. This is not a small issue, especially when these excutives actively work to lower the pay of the rank and file, deprive retires of health and pay benefits previously committed to, and just plain and simple do not deserve such obscene compensation at the the expense of shareholders.

“Shareholders” by the way includes not only large retirement funds but the retail investor who is trying to make their retirement work or have some means of profit that will help them pay the bills. Shareholders are not all “high value individuals” who hope to maximize their wealth so they can live in their mansons.

The idea is that with shareholder activism Management would not be able to find other ways to squeeze such obscene compensation from the corporation. Shareholder “empowerment” would also bring to light abuses such as backdating options to maximize management compensation far sooner than has happened with SEC action.

Invest in another company is a solution mentioned. Many investors do just that but the issue is that in many ways the financial system this country has in place is what makes our prosperiety possible. That system must regulate the actions of corporations to a degree to avoid actions that happend in the past that were not in the nation’s best interest.

LAISSEZ FAIRE does not work for the interests of the nation – it encourages fraud and abuse of the common investor for the benefit of the wealthy. Justification for this position include the basis for SEC actions, and examples such as Chevron and Carnegie at the turn of the century. Laissez Faire, as you would propose, does not work for the benefit of the nation, the investor, or the participants in the corporation – only the top dogs who take advantage of the rest of us.

OK, everybody beat up on me now, we can debate shareholder participation and executive compensation.

I agree that 210 mil is outrageous, but what is the alternative? The government getting involved? That never works. People with money always find a way to protect their income, so even if the shareholders got a bigger voice through some legislation, the management et al would find another way to get that 210 mil into the guys pocket.

I think the best way is through the pockets of the CEO’s etc. Don’t invest in that company or sell your stock and invest in a company that gives the stockholders a larger voice. I know it isn’t fair, and admittedly I know little to nothing about stocks etc. Perhaps someone more knowledgable can explain why my suggestion is unrealistic?

OK, so everybody beat up on me now, I disagree with the majority of Hot Air folk here.

$210 Million as executive pay is outrageous – and that is just one example. Executive compensation is way, way, way out of line with their services, shareholders see it, but are unable to do anything about getting ripped off because of the way the bylaws are written and executives have manipulated corporate system.

All Barney Frank (remember, I am definitely not a fan) is saying is give the shareholders more voice, more “empowerment” to run the companies they own with their shares.

Cavuto was out of line in his interviewing style. As a professional in that trade he should have handled it better. I am getting new appreciation for Michelle’s style, and O’Rilley’s, after seeing what the alternative is.

OK, everybody beat up on me now, we can debate shareholder participation and executive compensation.

Barney the pimp is starting to sound just like his economic adviser, Fidel Castro.

By the way, what ever happened to his “partner” who was caught running a brothel out of “their” apartment in Georgetown???

Zorro on January 6, 2007 at 10:24 AM

That was one of those “heads I win, tails you lose” deals…

Tell me again why we fought the British for our independence?

Because paying 2% in taxes was too much not enough….

By the way, what ever happened to his “partner” who was caught running a brothel out of “their” apartment in Georgetown???

Shareholders don’t own a company, they invest in it. @#$% commie…

Tuning Spork on January 6, 2007 at 2:46 AM

They do own the company and often are allowed to vote their shares according to the rules of the company. Then management changes the rules. That is what I am against. That and fraud which is much less of a problem because it is usually rooted out. I knew about Tycos fraud for years.

Anyway, big investors might not have the option of selling a stock without moving the price. Who is to say that if shareholders who own 40-60% of a company decide that they don’t like management and they want them out that they should have to fight company lawyers trying to game the rules of corporate governance?

I will wait and see the specific proposal, coming from Barney Frank I wouldn’t be surprised by the worst case, but we are jumping to conclusions on this because there is a real issue here that needs to be addressed.

Same thing with the ‘golden parachutes’. To attract the right guy, you have to offer him a contract that guarantees that if you kick him to the curb next year, he’ll have a certain amount to cover him while he’s looking for a new gig (and it’s always tougher to find a new job on good terms when you don’t already have one).

Intelligent shareholders understand that this is the deal they make with the corporation: they delegate substantial authority to the directors to be able to quietly negotiate things that cannot be done in public. If a group of shareholders wanted, they could propose an amendment to their bylaws capping CEO pay to a certain percentage of gross profits, or whatever formula they wanted, and if they could get enough shares to vote their way, they get the cap. They also don’t get the services of the executives who go to another company that will outbid them.

Cavuto’s problem was that he was attacking a straw man. Frank isn’t calling for a law defining a maximum amount an executive can be paid. This allowed Frank to repeatedly deny the words Cavuto tried to put in his mouth. Instead of asking if he supported a cap on CEO pay, he should have asked him why he wanted to prevent shareholders from exercising their right to delegate authority to the directors.

Share holder democracy? Is he kidding? Since when was being a share holder being a pseudo ceo? …
One Angry Christian on January 5, 2007 at 5:40 PM

Nobody forces you to buy stock, and you can sell any time you want to sell. If you think the CEO is overpaid (hello, Home Depot!), sell the freaking stock and buy Lowes.

And if you don’t like Lowes, buy some other stock.

And if you don’t like stocks, buy bonds.

And if you don’t like bonds, you can put your money in a mayonnaise jar and bury it in your backyard, for all I care, but the point is: It’s your money, and nobody’s forcing you to invest it, so either get your money out of the market or STFU about CEO compensation.

The dems are definitely playing to the Kos/ DU crowd by acting indignant on Fox.

This comes from Bryan over at Hot Air:
Rep. Barney Frank (D-MA) in the video below accuses the Bush administration of perpetrating “ethnic cleansing by hurricane” in Louisana after Katrina, in order to make Louisiana more Republican.
It’s sh…

This guy seems barely literate….

The word is definately out for the left to act very tough and confrontational with the “right wing”FOXNEWS.

Ben Hur on January 5, 2007 at 6:19 PM

Yeah, I noticed that too. Makes ‘em look tough for the DUmmies and Kos Kids and MsM