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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 private-sector intervention.

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 greed."

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 year."



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 corporate boards.

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 meeting.

Write to Joann S. Lublin at joann.lublin@wsj.com

http://online.wsj.com/article/SB120795932821709333.html?mod=hps_us_whats_news