Comments on: Weekend Question 3: Why Shouldn’t Companies Have to Reveal What Their Highest-Paid Employees Get Paid?

By: TBlumer

TBlumer — Tue, 01 Aug 2006 16:16:03 +0000

#5, you are exactly correct. The next argument then becomes “if we disclose it and our competition doesn’t, then we’ll be at a competitive advantage because Tom Cruise won’t work with us when he can go down the street and keep his privacy.”

Now if this is something that CONGRESS sees as an issue, it should pass a law that addresses the issue. I have to concede a point to you that the SEC should NOT be doing this on its own without specific Congressional authority; I tend to think of the SEC’s issuance of disclosure rules as interchangeable with the accounting standards bodies, which is an error on my part.

It all gets back to one of Bill Pierce’s core campaign points–that bureaucrats are running the country and setting its rules of day-to-day operation without adequate oversight, and all too often no oversight.

By: Steven J. Kelso Sr.

Steven J. Kelso Sr. — Tue, 01 Aug 2006 15:09:54 +0000

I understand and it does make some sense. I worry when the government gets involved though. Wouldn’t it be wiser for shareholders themselves demand that this information be disclosed?

By: TBlumer

TBlumer — Tue, 01 Aug 2006 14:11:54 +0000

#3, there is a decent argument for that, EXCEPT that a PUBLICLY traded company has responsibilities to its general-public shareholders. The debate over whether those responsibilities include disclosing exec pay and perks is settled, because the Board directly has the ability to influence that, and shareholders have to evaluate the job the Board is doing.

Whether a PUBLICLY traded company’s general-public shareholders need to know the pay of non-execs is an obviously touchy subject. I would argue that many shareholders would be offended if they knew what certain people were being paid, and that on that basis you can back into the idea that they probably have a right to know. After all, they’re (partial) owners.

A company can always decide that the hassles of being publicly traded are too much to handle and go private.

By: Steven J. Kelso Sr.

Steven J. Kelso Sr. — Mon, 31 Jul 2006 21:25:02 +0000

Because it is none of the general public’s business?

By: TBlumer

TBlumer — Sun, 30 Jul 2006 20:14:29 +0000

#1, that is very true. No matter how much an exec made, only a certain portion of it could be included in pension benefit calculations (it was about $160,000 I think for quite a while; now it’s in the neighborhood of $250,000). What this caused was a proliferation of so-called nonqualified plans that are often basically unfunded promises to execs who stick around. A NQ plan was, as I understand it, a major factor in why Enron went down so fast. Once execs saw trouble, those who could retired and cashed out. There’s a lot more to it than that, but no time or space for more.

By: meep

meep — Sun, 30 Jul 2006 19:23:07 +0000

By the way, they also capped the deductibility of pension benefits, which has been a small piece of the puzzle that has led to weaker pensions. It used to be the execs had all their pension in the same plans as the employees (to capture the deductibility), but now that little exec interest in the pension has had its $ incentive taken away.