Here are two dueling news stories that caught my attention today within seconds of each other. The first comes from MSNBC.com:
White House won’t try to directly limit exec pay
WASHINGTON – The Obama administration, which partly blamed out-of-whack executive pay for the nation’s financial crisis, says it won’t try to directly limit such pay, choosing instead on Wednesday to try to tame compensation through shareholder pressure.
Treasury Secretary Timothy Geithner said the administration will ask Congress to give shareholders a nonbinding voice on executive pay and to require corporate compensation committees to be independent from company management. That second provision would give the Securities and Exchange Commission authority to strengthen the independence of panels that set executive pay.
Separately, the administration is preparing to issue new, more specific regulations governing pay at financial institutions that have received infusions from the $700 billion Troubled Asset Relief Program. Those regulations, following legislation already passed by Congress, would limit top executives at these companies to bonuses no greater than one-third of their annual salaries.
An official said the administration will appoint a “special master” to oversee compensation at firms receiving large amounts of government assistance. The pay overseer would have the power to reject excessively generous pay plans.
The second comes from the New York Times:
Overseer to Set Executive Pay at Rescued Companies
WASHINGTON—The Obama administration on Wednesday appointed a compensation overseer with broad discretion to set the pay for 175 top executives at seven of the nation’s largest companies, which have received hundreds of billions of dollars in federal assistance to survive.
The mandate given to the new compensation official, Kenneth R. Feinberg, a well-known Washington lawyer, reflects the federal government’s increasingly intrusive role in the corporate affairs of deeply troubled companies. From his nondescript office in Room 1310 of the Treasury building, Mr. Feinberg will set the salaries and bonuses of some of the top financiers and industrialists in America, including Kenneth D. Lewis, the chief executive of Bank of America; Vikram S. Pandit, the head of Citigroup, and Fritz Henderson, the chief executive of General Motors.
The compensation of executives at some companies receiving aid provoked a firestorm of political outrage earlier this year. In revising a previous proposal to set pay limits, the administration has decided to take an approach that will leave the success or failure of the effort to curtail high compensation at the assisted companies in the hands of Mr. Feinberg. (Mr. Feinberg himself will not receive any government compensation.)
So which is it? Is the Obama administration planning on overseeing executive pay or not? Just looking at the title of the MSNBC article, you’d come away with the idea that the White House is not limiting exec pay, but the third paragraph puts the lie to the title. The New York Times title and article are in complete agreement. For this article at least, the Grey Lady is reporting the news, while the MSNBC article is spinning the news. Shame on MSNBC for attempting to deceive their readers. And shame on the Obama administration for their heavy-handed actions. So, what’s the correct term to describe government control of business?
When I read the two headlines in my RSS news feed, I recognized instantly that they couldn’t both be true, and in my mind’s ear I heard the Dueling Banjos tune, so here’s a good rendition you can listen to while rereading the two dueling stories.