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Wall Street Reform: Why is 'Say on Pay' for execs bad?

I'm continuing my series about Fact and Fiction on Wall St Reform as produced by The Whitehouse. The Lindsey Memo is an anti-reform talking points memo written by Larry Lindsey, a former Bush appointee and a former Enron consultant.


Lindsey Memo: "Labor gets 'Proxy Access' to bring its agenda items before shareholders as well as annual "say on pay" for executives."


These reforms would benefit every American whose savings, retirement account or pension fund is invested in the stock market. After a decade that began with Enron and Tyco, and closed with Lehman Brothers and AIG, it is difficult to believe that anyone would argue against giving shareholders a voice with respect to executive pay - or say that the SEC should not have the authority to let shareholders meeting reasonable ownership thresholds propose alternative board candidates. Shareholders are the owners. A basic principle is that they should have the ability to hold management and boards accountable. Giving shareholders a "say on pay" will help to ensure that compensation practices are aligned with the long-term interests of shareholders, not based on short-term profits that lead to irresponsible risk taking.

This one really confuses me, because the Lindsey Memo is claiming this is a bad thing. It's not actually fiction, because the changes mentioned are really true but... they're GOOD. What's the argument here? I don't get why it's so wrong that shareholders should have a say in how much the top level executives are paid? I just don't get why in the hell that could be a bad thing. Average CEO pay is orders of magnitude higher than the workers in their companies and they have incredibly bonus packages on top of that. The companies are fiscally responsible to the shareholders to provide a profit and increase in their investment, so why aren't the core fiscal choices (like pay rates for the top execs) fair game for the shareholders?

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