From Deseret News archives:
Bush urges rational pay for executives
"These compensation packages can get out of hand," he said in an interview on CNBC. While incentives for performance are necessary, he said, companies should "make sure the incentive pay is rational."
The president, who didn't mention any executives or companies by name, encouraged investors to pressure corporate boards on compensation.
"I don't think government should control salaries," Bush said, "but I would hope shareholders would take a close look at some of these compensation packages."
Total pay for chief executive officers at 1,522 of the largest U.S. companies swelled by a median of 30 percent in 2004 to $2.4 million. That's double the rate of growth in 2003, according to a survey released in October by Portland, Maine- based researcher The Corporate Library.
The corporate governance system "should work hard to make sure that the compensation packages are fair" and based on performance, Bush said.
The president also said he and Treasury Secretary Henry Paulson are looking at ways the Sarbanes-Oxley Act can be "fine tuned" to make sure it's not driving capital away from U.S. public markets. Congress passed the legislation, which subjects companies to stricter auditing rules and stiffer penalties for financial crime, in 2002 after accounting frauds at Enron Corp. and WorldCom Inc. eroded investor confidence.
"One way you become less competitive is through overregulation," Bush said.
Groups such as the U.S. Chamber of Commerce have complained that costs associated with Sarbanes-Oxley and a requirement that corporate executives attest to the accuracy of financial statements are prompting companies to hold initial public offerings overseas. North American companies will spend $6 billion this year complying with the law, according to Boston-based AMR Research.
Contributing: Jesse Westbrook
E-mail: dmclean@bloomberg.net
