Fox Biz Debates Obama's Plan to Limit CEO Pay
The day after Treasury Secretary Tim Geithner requested more authority from Congress, on “Money for Breakfast” the Fox Business Network explored the possibility that such authority will come to include limiting executive compensation
Host Alexis Glick interviewed Overstock.com CEO Patrick Byrne and Jonathan Hoenig, managing editor of Capitalistpig Asset Management, about the administration’s desire to curb financial firms pay.
Hoenig was disturbed by the potential for even more government intervention, saying, “It’s very frightening, Alexis. It’s unbelievably frightening. We are still a capitalist country and the basis issue here is property rights.”
According to Glick, one option being considered by Obama would be “matching pay with performance.”
Hoenig argued that the president doesn’t have constitutional authority to interfere.
“Where, where Obama believes he has any constitutional authority to set pay at a private company, I just don’t understand,” Hoenig said.
Byrne agreed with Hoenig’s assertion that pay should be a shareholders decision, but still advocated a regulatory solution.
“I think there is a regulatory approach that could be taken that’s within the constitution. And that is, to do what they say shareholders have to approve the pay package. Just like shareholders have to approve in Sarbanes-Oxley. They have to pick the auditors, they have to approve a couple things that’s in the proxy statement,” Byrne said. No one brought up criticism that Sarbanes-Oxley was “bad regulation.”
A Wall Street Journal op-ed from Sept. 2008 pointed out provisions in the “revenge of Enron” regulation known as Sarbanes-Oxley helped create a chain reaction of problems within financial companies.
Glick did challenge Byrne’s claim, asking, “But to make a blanket assumption that all financial companies across the board will now face executive compensation guidelines is just the opposite of what the free capital market is all about.”
Hoenig also emphasized that bailouts and pay curbs are “not capitalism.”
“I think it takes a lot of chutzpah for the president, who to my knowledge has never worked in corporate