Wednesday, February 10, 2010


I just read another article (by Sam Stein, Huffington Post) regarding the interview I was referring to in my previous post. It is a little more fair, in that it provides more context for his comments. OTOH, it could even more damning in that it goes to show his double speak on compensation. I don't back off my disbelief of his hypocrisy and judgement and "shock" of high salaries, but if you could take him at his word, some of his comments make sense. Following is the full text of the portion of the 30 minute interview by Bloomburg Business Week that in question. The portion in bold is the part that was left out of the other article on this. The principal in the idea makes sense to me. Someone tell me if I'm off on that.
BLOOMBERG: Let's talk bonuses for a minute: Lloyd Blankfein, $9 million; Jamie Dimon, $17 million. Now, granted, those were in stock and less than what some had expected. But are those numbers okay?

THE PRESIDENT: Well, look, first of all, I know both those guys. They're very savvy businessmen. And I, like most of the American people, don't begrudge people success or wealth. That's part of the free market system. I do think that the compensation packages that we've seen over the last decade at least have not matched up always to performance. I think that shareholders oftentimes have not had any significant say in the pay structures for CEOs.

BLOOMBERG: Seventeen million dollars is a lot for Main Street to stomach.

THE PRESIDENT: Listen, $17 million is an extraordinary amount of money. Of course, there are some baseball players who are making more than that who don't get to the World Series either. So I'm shocked by that as well. I guess the main principle we want to promote is a simple principle of "say on pay," that shareholders have a chance to actually scrutinize what CEOs are getting paid. And I think that serves as a restraint and helps align performance with pay. The other thing we do think is the more that pay comes in the form of stock that requires proven performance over a certain period of time as opposed to quarterly earnings is a fairer way of measuring CEOs' success and ultimately will make the performance of American businesses better.
Then, this article written by Sam Stein of the Huffington Post, pointed out some of his previous statements that support his tone regarding bonuses.
In February 2009, Obama gave a speech on executive compensation in which he declared that, in American, "we don't disparage wealth. We don't begrudge anybody for achieving success. And we believe that success should be rewarded." In March 2009, Obama told the Business Roundtable that the job of a lawmaker is "not to disparage wealth, but to expand its reach." And in a brief statement on executive compensation in October 2009, Obama repeated the lines: "We don't disparage wealth; we don't begrudge anybody for doing well. We believe in success. But it does offend our values when executives of big financial firms -- firms that are struggling -- pay themselves huge bonuses, even as they continue to rely on taxpayer assistance to stay afloat.
Again, if he stuck with the same message, I could get behind it. I just don't trust anything he says. Also, it bothers me when he says that bonuses for his friends who, in his opinion, are business savvy are okay, but generally for he massses, they are not. Also, in regards to the big bonuses, I don't like them any more than the next guy, but weren't they required due to previously written and signed contracts? Would the idea outlined in bold in the above interview keep that from happening again?

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