Candidates Target Executive Pay
McCain Comments Echo Some Themes Of Obama, Clinton
By Joann S. Lublin
The Wall Street Journal
Saturday, April 12, 2008
Sens. John McCain and Barack Obama both attacked executive
compensation this past week. Unlike Sens. Obama and
Hillary Clinton, however, the likely Republican nominee opposes
new government steps to curb pay and instead favors
Sen. McCain recently blasted what he called the "outrageous" and
"unconscionable" rewards received by leaders of Bear Stearns
Cos. and Countrywide Financial Corp. despite the credit crisis.
The Arizona Republican reiterated his criticism on Wednesday.
Sounding themes more often heard from Democrats, Sen. McCain
declared, "There's a backlash in America today against corporate
His unusually blunt remarks suggest that executive pay may be a
prominent issue in the fall campaign. Sens. Obama and
Clinton have criticized excessive pay packages from the stump --
as Sen. Obama did again on Friday. An Obama commercial
that has aired in 14 states assails chief executives "who are
making more in 10 minutes than ordinary workers are making in a
Both Democrats support a Senate bill that would require public
companies to give shareholders an annual nonbinding vote on top
officers' compensation. Sen. Obama, of
Illinois, introduced the measure,
similar to one that passed the House last year. "Washington
needs to act immediately to pass this legislation'' and change
"a system where bad behavior is rewarded,'' Sen. Obama said in
Friday's prepared remarks. Obama staffers recently renewed
his request for Senate hearings on the measure.
If the "say-on-pay" bill doesn't pass this year, it "will be a
priority for Sen. Obama as president," campaign policy director
Heather Higginbottom says. A spokesman for New York Sen.
Clinton's Senate office says she also favors additional federal
rules on executive-pay disclosures.
The say-on-pay bill is widely opposed by business groups, which
believe it is unnecessary and would undermine the authority of
Sen. McCain hasn't taken a stance on the say-on-pay bill, and
opposes legislative or regulatory cures for executive-pay
problems, says senior policy adviser Douglas Holtz-Eakin.
Excessive executive compensation when shareholders lose money
troubles Sen. McCain, Mr. Holtz-Eakin says. He adds that
the senator believes the private sector could take steps "to end
the cozy relationships that surround these pay packages.''
Among such moves that Sen. McCain offered Wednesday was
splitting the roles of board chairman and CEO.
An analysis of campaign contributions suggests that Sen. McCain
relies somewhat more on top executives for financial support
than either Sen. Obama or Sen. Clinton. At least 6.1% of
the nearly $65 million donated to his campaign through February
came from chairmen, CEOs, presidents or chief operating
officers, concludes an analysis for The Wall Street Journal by
the nonpartisan Center for Responsive Politics. That
compares with at least 5.2% for Sen. Clinton and at least 3% for
Sen. Obama, the analysis found.
McCain and Obama campaign officials say such contributions have
no influence on their candidates' positions about executive
compensation. Donors "don't drive the policy process," Mr.
Holtz-Eakin says. Ms. Higginbottom of the Obama campaign
says, "I don't think [their money] will have any influence" on
Sen. Obama. A Clinton campaign spokesman didn't return calls
for comment on the donation issue.
Opinion polls find many Americans are angry over high levels of
executive pay. "Clearly, it's an issue that has resonance
across the country,'' crossing party lines, observes Timothy
Smith, a senior vice president of Walden Asset Management, which
oversees about $1.6 billion of assets in so-called socially
responsible funds. Mr. Smith helped organize a coalition
that filed say-on-pay shareholder resolutions at nearly 100
companies this year.
In a campaign appearance Friday, Sen. McCain said he strongly
endorsed Aflac Inc.'s voluntary decision to become the first
public U.S. company to give investors a say
on pay; the vote is to occur at Aflac's May 5 annual
Write to Joann S. Lublin at