Yesterday, in testimony before the House Financial Services Committee, former Senator Phil Gramm called objections to inflated CEO pay and calls for better disclosure “bigotry against the successful.”
He also said that the $75 million retirement package for Ed Whitacre at AT&T (it was more like $137 million) was “an outrage” — because it was not enough, describing him as “exploited.”
This testimony is astonishingly boneheaded, considering that it comes from a former Congressman and Senator who got to see what corporate failure looked like with the collapse of Enron, located in his state and with his wife, Wendy Gramm, on its board.
There are two core passions at the heart of the American spirit. One is unlimited opportunity. There is no bigotry against the successful. Going back to the earliest days of this country, we have nothing but admiration for those who succeed, whether children of poor single mothers who grow up to be President to nerds who drop out of college and become the wealthiest men in the world before their 30th birthdays.
But the other core passion of the American spirit is for justice. We love to see someone succeed and be rewarded for success. What we do not love is seeing people divert the rewards earned by others to their own bank accounts. That is where the exploitation is. The data on CEO pay show that the ROI for investors is poor, pay is not tied to performance, and shareholders who object to the structure of pay plans have no recourse beyond symbolic “no” and “withhold” votes.
No one wants companies to succeed more than their investors do. That is why they entrust their money to the executives. Someone needs to explain to Gramm that if CEOs get to pick the people who set their pay, it is not the executives who are being exploited.