Obama overlooks 'Say On Pay' in VP selection

NY Times:

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Republicans and their presumed presidential nominee, Senator John McCain, have criticized Mr. Johnson, the former chairman of Fannie Mae, accusing him of getting favorable rates on three home mortgages totaling $1.7 million as a friend of the chief executive of the Countrywide Financial Corporation, the troubled mortgage lender that has became a symbol of the excesses that led to the crisis in subprime mortgage.

Mr. Johnson was also involved in some of the more controversial executive compensation decisions in recent years, serving on the board of five companies that granted lavish pay packages to their executives — and often playing a key role in approving them.

One of the more well-known cases involves UnitedHealth Group, a Minnesota company, where Mr. Johnson was a board member and later head of the compensation committee.

The company came under fire after the chief executive was granted more than $1.4 billion in stock options — some $618 million of which was returned as a result of settlements with federal regulators and shareholders.

The executive, William McGuire, resigned, but he kept $800 million from the package.

Because of cases like UnitedHealth Group, Mr. Obama, Democrat of Illinois, introduced legislation in the Senate last year to restrict runaway compensation.

The measure, informally called “Say on Pay,” would give shareholders an advisory role in setting executive pay packages. It passed the House and is pending in the Senate.

In introducing the measure, Mr. Obama said it was intended to “force corporate boards to think twice before signing over millions of dollars to C.E.O.’s.”

He added that “the rate at which executive pay has grown, as compared to stagnating wages among American workers, is rightfully frustrating shareholders and employees alike, especially given the lackluster performance of many of the companies paying these high salaries.”

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The hypocrisy is more interesting than the pay issue. I am sure that Obama would not think it a good idea to limit what could be paid authors of books, like himself. He would also not limit what the White Sox could pay for a star player or what his Hollywood buddies could make for movies. It is an indication of his lack of understanding of business that he would threaten compensation for executives.

Admittedly, I have never been paid a million dollars for my services much less several hundred million. I don't have any jealousy of those who have. They have usually done things for the companies that make them worth it. If they don't perform up to their compensation package they are soon gone.

What I really don't like is someone like Obama who is judgmental about the issue until it comes to someone on his team. On the pay issue, he is not the Jim Johnson that Obama knew. In fact, Obama probably did not know the guy well at all and is just going along with the recommendations of fellow Democrats like Kerry. That is a bad start.