CEO Pay Is Nobody's Business but Shareholders'
Washington, D.C., February 11, 2009--In a new article just published on Businessweek.com, Dr. Yaron Brook, executive director of the Ayn Rand Center for Individual Rights, argues against the idea that our government should dictate CEO pay to America's companies. According to Dr. Brook, "Shareholders have a moral right to pay whatever they judge necessary to attract, retain, and motivate talented leaders."
This outrages me. Shareholders aren't paying; the taxpayers are. So long as a company runs at a profit, there is some justification for allowing it to assign that profit as it sees fit, on the grounds that it must be doing something right. (I deviate from corporate doctrine by asserting it is not acceptable for a company to put out shoddy goods and services to its customers so as to enrich its shareholders and executives, nor to cheat and abuse its workers, nor to shortchange safety protocols so as to cause damage to persons and habitat; but some examples of such behavior are legal and common, and many more are simply gotten away with.) The individuals in charge of the company may at least be demonstrated by said profits to be competent at their jobs. However, when a company does so poorly that it is in danger of collapsing altogether, which failure could harm the public, and the company goes to the government and demands money -- then it absolutely becomes the public's business how that money is spent, because it is our money, and because the executives in charge of the company have been demonstrated as incompetent by reason of their faulty decisions leading to imminent failure.
I don't think they should have bonuses. I don't think they should have $500,000 a year. I don't think they should have jobs. And they have absolutely no right to demand money with no strings attached. That is arrogant beyond all tolerance. It is another example of privatizing profit and publicizing risk. It rewards failure; worse, it rewards leeching. This kind of shell game with money is what caused much of the economic sinkhole to start. One cannot have a stable economy if the bottom layers are soaked to death, nor if the upper layers are full of ignoramuses. And while we are on the topic of rampant incompetence, I am not impressed by the government's ability to count with its boots on, and I am not pleased to see any segment of society fail so epically that it requires government assistance to bail out, thus expanding the scope of government into areas where it often does as much harm as good.
Current events imply that extravagant sums of money do not attract talented leaders; they attract people who enjoy hoarding huge sums of money and aren't too picky about how they get it. This previous approach having failed spectacularly, I would like to see something else tried instead, and some other people employed to implement it, while we still have some fragments of an economy to scrape together.