SECTION 4. FINANCIAL ASSISTANCE TO IRREPLACEABLE RESOURCES (F.A.I.R.)
WHEREAS the Chief Executive Officer is a vital human resource and a prime contributor to the health of the nation's economy;
WHEREAS competitive compensation ensures stewardship from corporate leadership and promotes innovation;
WHEREAS academic study has proved that individuals are best rewarded by compensation that is not only high in absolute terms, but also greatly exceeds that of their peers, in relative terms;
Therefore, the purpose of this section is to ensure just and rational compensation for America's Chief Executive Officers by means of a minimum wage constituting total compensation of no less than eight hundred times that of the average worker.
CEO minimum-wage rules are essential to the competitiveness of the U.S. economy. We've got an amazing bank of talent in the top executives in this great country. Let's not bankrupt that talent bank! After all, if there's a minimum-wage law for the lowest-paid workers, then there should be minimum-wage guarantees for CEOs, too.
The importance of appropriate and just executive pay to the proper functioning of publicly traded entities is why we here at The Motley Fool support Section 4, the F.A.I.R. provision, of H.R. 401, including an upward adjustment to the minimum-wage floor for CEOs to compensate for inflation. Some people complain that a recent ratio of CEO pay compared to the average worker's was 411-to-1. But according to a study conducted last year by the Institute for Greater Resources for Education on Executive Demands, top-level executives experience exponentially more stress related to the responsibilities inherent in their positions than the average worker does.
What's more, we mustn't lose our leadership position in the global economy. The U.S. beats all other industrialized countries by a wide margin when it comes to CEO pay. Consider Japan -- CEOs there make only 11 times what the average worker does. More importantly, the U.S. economy is much more robust than Japan's, so imagine how much better it would do if all CEOs were even more justly compensated with at least 800 times the wages of the average worker.
Linking pay to performance would be a big mistake. Business is full of events that are well beyond a CEO's reasonable control, and it would be patently unfair to dock a CEO's pay if things go awry.
The competitive nature of our economy must be upheld. Studies have shown that it's not just money that counts -- it's making more than everybody else that really fosters excellence. Assuring CEOs that they will be able to send their children to better schools, eat higher-quality food, sport the latest fashions, and enjoy comfortable retirements in Italian villas will allow these stellar leaders to keep an unwavering eye on the ball instead of becoming too distracted by personal matters. You can't run a business if you're too distracted by banal day-to-day details.
"The passage of this bill ensures a future where CEOs aren't unduly distracted by trying to find ways to live within onerously tight budgets," the Fool's Tom Gardner says. "'Hungry' should just be a figure of speech in business. Shareholders expect their companies' CEOs will be cutthroat when it comes to their rivals -- not cutting somebody's throat over the last pig-in-a-blanket at the annual meeting."
The Motley Fool believes in the competitive power of the free market, and that's why this bill, including minimum-wage stipulations for CEOs, is so important to our economy. Let's face it: CEOs aren't free, friends.
Email us at CEORights@fool.com and join our crusade! We need your help to pass this valuable legislation.
See Elgin Clay, our lobbyist in Washington, discuss Section 4 of H.R. 401.
Continue to our commentary on the next section of H.R. 401!