S.E.C. enacts toothless “cosmetic” rules on executive pay

An article in the New York Times reported on the Securities and Exchange Commission adopting rules on corporate pay.

The near collapse of the U.S. economy badly hurt workers and their families, leaving many jobless and growing numbers destitute. During and throughout this period, Wall Street executives and their counterparts at big banks did not share the pain caused by their economic dealings. They continued to receive salaries, bonuses, and other types of compensation so large that "ordinary people" can only shake their heads in disbelief and disgust.

Government action to reform Wall Street is not going to happen because corporations have too much power. Politicians, however, are likely to insist on strictly cosmetic changes in order to appear to be doing something about the problem. The Securities and Exchange Commission has enacted new "rules" giving shareholders a voice a very small one regarding these payouts to corporate executives. According to the article in the Times, stockholders will be permitted to vote on the compensation of executives at publicly traded companies at least once every three years. That vote, however, will be advisory only, and the corporations' boards of directors will be free to ignore it.

Protess, Ben. In Split Vote, S.E.C. Adopts Corporate Pay Rules. New York Times. January 25, 2011.