Wednesday, January 31, 2007

Bush’s Sharp Warning to Execs on Lavish Pay Given to Wrong Audience

The President stood atop the Big Board today speaking on the State of the Economy. In his talk he dressed down CEO’s for not earning their extravagant pay. At that point the audience went quiet. But who was in attendance? How many CEO’s spend their day watching traders at the NYSE? Not many, unless it’s their turn to ring the bell.

The regular crowd had to be working given the surprise nature of the visit. Bush spoke to Big Board’s stock traders, not to corporate big dogs. Yet the message hit home given traders’ pay this last year. I can see why they got quiet. Record bonuses were distributed this past holiday season to Wall Street traders as most brokerage houses made historic high profits.

So Bush got to dress down a bunch of corporate chiefs who weren’t there. Did he wink afterwards, thanking his base for being absent for their public dressing down?

The President got to reprise his concerns for broader America, last shown after Hurricane Katrina. He finally raised several issues, long recognized as problems by the average citizen. They include the growing gap between the rich and the poor as evidenced by the income inequality gap (which accelerated into hyperspace under Bush’s term in office). The President also noted people’s anger over enormous salaries and perks for America’s CEO’s. This isn’t limited to employees but extends to large mutual fund holders. Ask new Defense Chief Robert Gates, ex. Fidelity Chairman or the slightly longer tenured Treasury Head Hank Paulson, ex. Goldman Sachs CEO.

President Bush re-delivered the myth of “pay for performance”, that people earn what they deserve by their individual contributions to their company. Never mind corporate systems drive 95% of the results according to Dr. Deming, a legendary management guru.

So what if Bush showed up at the wrong place if he really wanted to encourage CEO’s to earn their lavish pay. He’s regularly “a day late and a dollar short”.

No comments: