One argument that you don’t hear very much in what I’m doing–you don’t hear it very much, is, it’s none of the government’s business to set compensation. It’s a bad idea. If it’s not unconstitutional, it’s unsound. I thought I’d hear more about that argument, but I really don’t hear much about that from anybody in Congress, or frankly, many people anywhere. And there’s a reason for that, I think, I’ve learned in doing this job.
That argument, and the argument about Tiger Woods and Alex Rodriguez, and Pearl, and Madonna, and all these athletes and experts, ignores the fact that with the seven companies I’m dealing with, the taxpayer owns those companies. It’s the taxpayer and the government acting as creditors of those companies that give rise to my mandate. The taxpayer hasn’t bailed out Madonna, or Tiger Woods, or to my knowledge, Pearl.
The fact of the matter is, that the main argument I get in support of what I’m doing, is that these companies survived because of the taxpayer. And the taxpayer has every right, acting through its elected representatives, to seek, to influence, the compensation of the debtors–these seven companies. And by law, if and when these companies repay that debt, I am out. I no longer have any mandatory jurisdiction over those companies.
The primary objective: Pay the taxpayer back. That’s what the Congress really wants–pay us back, and then be gone.
And that’s a very important distinction to keep in mind. I have publicly said, and continue to believe, that the Congress should not expand my jurisdiction. The Congress should not invite me to broaden my compensation determinations. I have said publicly, I think that would be unwise. I think what I am doing is, in a very limited sense, trying to influence the debate involving these companies so that the primary objective can be achieved . The primary objective: Pay the taxpayer back. That’s what the Congress really wants–pay us back, and then be gone.
Now, to the extent that in making my determinations there will be some interest on the part of corporate boardrooms and corporate America beyond these seven companies–fine, I hope that’s so. I hope that’s so. But that’s certainly not my primary objective.
Also, I’ve tried to make clear in what I’m doing, the dollars involved are much less important to me than the criteria that we have articulated in our reports, conditioning pay on certain determinations we have made about how compensation should be determined. Things like, no guarantees, other than base salary, no guarantees. No guarantees. No retention payments, no guaranteed bonuses–no guarantees.
Relatively sliding scale, but smaller base salary, coupled with salarized stock and long-term stock required by the statute, are designed to reward individual compensation by tying that compensation to corporate performance.
Also, longer-term stock that can, vests immediately. Why immediately? The law requires it. The law requires that any salarized stock that I award or determine must vest forthwith, like cash, twice a month. Have no control over that. But it’s not redeemable right away. In our criteria, salarized stock is redeemable a third after two years, a third after three years, a third after four years. If the stock goes up – [the media] has a story, Andrew saw this, I am sure most of you did in The New York Times two Sundays ago. You know, if you give them too much stock, and that stock grows over three or four years in value, there may be a windfall for the executives.