The entire AIG bonus brouhaha has encouraged an unusually large number of people to say an unusually large number of very stupid things. I don't think I've heard anything quite as stupid, though, as what Rep. Barney Frank had to say:
But retention bonuses are to a great extent extortion. It is people saying as you suggested in the question, Harry, I've got the combination to the safe and if you don't bribe me i'm going to leave and you'll never be able to open the safe. I think it is wrong and let's point out a lot of very talented people have lost their jobs in this financial crisis. It's not that they wouldn't be able to hire good people to do this. So I really resent the extortionist element of this and I think that's one of the things we have to deal with, not just with AIG but going forward to restrict that.
Someone needs to brand the text of the Thirteenth Amendment into Frank's fat confiscatory ass. I don't care whether your entire company — your entire industry — will collapse without me. I don't have to work for you if I don't want to. And I may not want to if you don't make it worth my while. What is "worth my while" is up to me, in all of my avarice and irrationality. If I make outrageous and unreasonable demands, you can tell me to take a hike, or not, depending on your needs and how you value my services. But I am a free man.
Should shareholders carefully evaluate whether corporate salaries and bonuses are based on a rational evaluation of the executive labor market, the skills of the executives, and the need for their services? Yes. Should salaries based on mere cronyism, not the shareholders' best interests, be scrutinized and addressed? Absolutely. But is any individual obligated to work for less than he or she is willing to accept because the corporation needs the help? Hell no.
Frank would never apply this principle further. Can you imagine him arguing that a labor union was engaged in extortion when it threatened to strike if it didn't like a contract offer?
Last 5 posts by Ken White
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