Don’t Cap CEO Pay: End Bailouts
September 23, 2008
Washington, D.C.--As the government scrambles to assemble a massive financial bailout package, many are declaring that companies receiving the taxpayer-funded bailouts should face severe restrictions on executive compensation. As Representative Barney Frank put it, “I just think it’s inconceivable that the taxpayer should put some money at risk because of bad decisions made by people who then continue to be rewarded without any restrictions.”
But according to Yaron Brook, executive director of the Ayn Rand Center for Individual Rights, “This is nothing more than a political maneuver designed to establish a precedent for regulating all CEO pay. If these long-time critics of executive compensation were really concerned about the injustice of making taxpayers shoulder the burden of others’ mistakes, they would be opposing government bailouts--not making CEOs into scapegoats.
“It’s true that some CEOs performed poorly in the lead-up to this crisis, but that is no reason to allow the government to nullify private contracts. A company sets its CEO’s compensation based on its best guess as to how he will perform. Just as a baseball team can’t refuse to pay its star pitcher his agreed-upon salary after an off year, so a CEO’s poor performance does not justify paying him less than what he was promised.
“The government should not use this crisis as an opportunity to start dictating to shareholders how much they can pay their managers. Doing so will only compound the injustice of this bailout--not lessen it.”
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Yaron Brook is executive director of the Ayn Rand Center for Individual Rights. He is a regular contributor to Forbes.com and a contributing editor of The Objective Standard. His articles have been featured in major newspapers such as USA Today, the Houston Chronicle, the Chicago Sun-Times, the Providence Journal and the Orange County Register. Dr. Brook is often interviewed on radio and is a frequent guest on a variety of national TV shows, having appeared in the new Fox Business Network, FOX News Channel (The O’Reilly Factor, Your World with Neil Cavuto, At Large with Geraldo Rivera), CNN (Talkback Live and the Glenn Beck Program), CNBC (Closing Bell and On the Money), and C-SPAN. Dr. Brook, a former finance professor, lectures on Objectivism, capitalism, business and foreign policy at college campuses, community groups and corporations across America and throughout the world.
To interview Dr. Brook or book him for your show, please contact Larry Benson:
949-222-6550, ext. 213
For more information on Objectivism’s unique point of view, go to ARC’s Web site. The Ayn Rand Center is a division of the Ayn Rand Institute and promotes the philosophy of Ayn Rand, author of “Atlas Shrugged” and “The Fountainhead.”