by Raymond Bilodeau

Created on: March 26, 2009

Strangely enough, the question of Congress setting limits on corporate executive salaries is being treated as "socialism." Corporations were one of the earliest forms of socialism, going back to the Roman Empire. Individuals pooled their money for business or charitable purposes. Business entities were controlled by the persons putting in the money, now called shareholders or stockholders. It is only recently that shareholders have lost control over corporations, with many corporations seeing shareholders as useless or even dangerous, to the extent they try to control corporate activities.

Congressional limits on salaries of corporate activities just means that this control will finally fall into the political arena, which is now almost completely controlled by the rich corporate world, from corporations to corporate executives. While there may be a politically correct highly visible salary limit set, there will also be the covert list of exceptions that will turn the stated limits into meaningless verbiage.

What is needed is a requirement that shareholders control executive salaries, that the total corporate wage and salary range must fall into a ratio from highest to lowest. All pay should be based in part on corporate profit. The idea that a mid-level manager contributes more to corporate success than his or her secretary is very strange. Even the doorman or the janitor is part of the corporate entity and contributes to its success or failure, and will contribute more if that contribution is recognized in terms of a share in profit.

Corporate law should also return to the idea that a corporation must serve a purpose other than merely making money by whatever means possible. A mission statement should be enforceable as much as any other corporate contract, and the shareholders should be required to be responsible for that aspect of corporate activity as well.

Shareholder responsibility for corporate actions is not a liberal or conservative doctrine. It is what corporations used to have, before the wealthy removed the only real limit to their ability to treat their corporations as cash cows. The AIG executives and the big corporations' lavish taste for luxury jets and lifestyles are contrary to corporate profits maximized in the form of dividends to the shareholders. Where is the outrage of these shareholders? Their corporate interests are being seriously shortchanged. The lack of shareholder outrage and control over this lavish waste of what should be their money is what Congress needs to look at.

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