Adjunct Law Prof Blog

Editor: Mitchell H. Rubinstein
New York Law School

Wednesday, April 15, 2009

Big Brothers Watching

Administration Seeks Increase in Oversight is an interesting NY Times article from March 22, 2009. It is about the fact that the Obama Adminstration is seeking additional oversight with respect to Executive Pay at financial institutions. The article is abit vague about what exactly the Administration is interested in.  As the article states:

The administration has been considering increased oversight of executive pay for some time, but the issue was heightened in recent days as public fury over bonuses spilled into the regulatory effort.

The officials said that the administration was still debating the details of its plan, including how broadly it should be applied and how far it could go beyond simple reporting requirements. Depending on the outcome of the discussions, the administration could seek to put the changes into effect through regulations rather than through legislation.

One proposal could impose greater requirements on company boards to tie executive compensation more closely to corporate performance and to take other steps to ensure that compensation was aligned with the financial interest of the company.

The new rules will cover all financial institutions, including those not now covered by any pay rules because they are not receiving federal bailout money. Officials say the rules could also be applied more broadly to publicly traded companies, which already report about some executive pay practices to the Securities and Exchange Commission. 

I am afraid that this might be an overreachtion to the AIG bonus mess. Freedom of contract is an essential part of labor and employment law-indeed most of law. The government does not need to get involved in any perhaps the most extreme situations as when it is giving a company bailout money. Lets not overreact.

Mitchell H. Rubinstein

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Obama and the Dems are just warming up so they can pass the much-dreamed-of Maximum Pay Act, making it illegal to earn more than 40 times the minimum wage. Legislators and their cronies excluded, of course.

Posted by: Gary | Apr 16, 2009 9:27:22 AM

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