Bush Warns Corporate America

President Bush paid a visit to Wall Street today to give his State of the Economy speech. As part of his remarks, he warned corporate America about the way they handle executive compensation:

NEW YORK (AP) -- President Bush took aim Wednesday at lavish salaries and bonuses for corporate executives, standing on Wall Street to issue a sharp warning for corporate boards to "step up to their responsibilities" and tie compensation packages to performance.
Bush's "State of the Economy" speech, delivered from the financial center of the world, was aimed at bringing his economic message out of the shadows of the Iraq war. On his second day in a row focused on the economy, the government reported faster-than-expected growth of 3.5 percent in the final quarter of last year.

The president acknowledged people's continuing nervousness about their financial picture, despite a string of similar reports that provide some reason for optimism. He said some workers are being left behind in the booming economy and the disparity between the rich and the poor is growing.

"The fact is that income inequality is real. It has been rising for more than 25 years," the president said. "The earnings gap is now twice as wide as it was in 1980," Bush said, adding that more education and training can lift peoples' salaries. ...
The president spoke to an audience of business leaders at the venerable Federal Hall _ a symbol of both America's democracy and its economic resilience. Later, he stopped along Broad Street to shake hands with New York police officers and then ducked inside the New York Stock Exchange. The surprise visit caused a frenzy on the already chaotic trading floor. It was so crowded that traders standing just five feet away of Bush had a better view of him on television screens.

With all due respect to the President, the federal government has no business telling corporations, whether private or public, how to structure their compensation packages. Private companies should be able to do whatever they wish provided they stay within the law, and publicly traded corporations have built-in checks in the form of stockholders who, should they object to their company's compensation packages, can vote the bums out or sell their stock. It's frankly none of the government's business how companies choose to pay their employees.

Corporations are not created for the purpose of providing jobs or closing the wealth gap. They exist for the purpose of creating and building value for shareholders.