Why 'say on pay' is a waste of time

We have a little problem in the U.S., since we finance political campaigns largely with corporate money. CEOs direct that corporate money to politicians who try to manage the delicate balancing act of making the world safe for a few thousand CEOs while appearing to serve the millions of people in their state whose livelihoods those CEOs sometimes damage. That damage, which is getting harder to hide, is leading to a legislative proposal on CEO compensation that will do nothing to prevent future financial catastrophes.

This is a difficult challenge for politicians. A case in point is the House proposal for shareholders of public companies to have a right to vote on CEO pay -- a.k.a., Say on Pay. It is important to emphasize that this vote has no teeth because it is non-binding. It also does not apply to all public companies, only the biggest ones. And it does not involve any actual power to change CEO pay -- although for regulated companies, such as banks, the proposal lets regulators limit what they judge to be "inappropriate or risky compensation packages."