For those who caught my original call for the ouster of Bank of America (NYSE:BAC) CEO Ken Lewis, or my more recent reaction to his stepping down, it's painfully obvious that I have no love lost for this banking chief.
So you might think I'd be cheering to hear that the White House's "pay czar" has decided that Lewis should get nothing for 2009. Oh, you didn't hear? That's right, Kenneth Feinberg, who is playing Big Brother on pay packages, has said that Lewis should treat 2009 as a year of volunteer work. That, of course, means no bonus, but it also means that Lewis has to pay back some $1 million in salary compensation he's already received.
Great news for Lewis haters, right? Maybe, but this thunderbolt has far bigger implications.
I'm all for Lewis having to suffer financial consequences for the abysmal performance of the bank he's been overseeing, but this is no way to go about it. What's next? Will execs at fellow government ward Citigroup (NYSE:C) face the same fate? Will Uncle Sam decide that he likes being the decider so much that he'll start sticking his pudgy hands further into the economy ... into, say, healthier banks like Wells Fargo (NYSE:WFC) and (shudder) Goldman Sachs (NYSE:GS)?
Please tell me this is all a very bad dream. You just don't do this. How can private businesses be expected to operate efficiently and attract talent when they not only have to deal with government regulations, but also live in fear of take-backs on previously agreed-upon compensation?
Don't get me wrong, Uncle Sam has his place in all of this. After all, he's part-owner of Bank of America, and an even larger stakeholder in AIG (NYSE:AIG), Fannie Mae (NYSE:FNM), and Freddie Mac (NYSE:FRE). But let's be sensible about this, and teach those folks in Washington how business really works.
Want to have C-suite compensation linked to real measures of performance? Want to make sure that blind risk-taking isn't rewarded? That's great! But this needs to happen through new compensation packages that reward executives for executing on a sober, long-term strategy. This business of retroactively deciding that somebody should have received no salary for a year of work, well that's just … that's just ... well, it's malarkey (pardon my French).
But what can I say? I guess it's just a mad, mad, mad, mad world.
For Foolish thoughts on other government meddling check out Brian Orelli's article on trying to have your health-care cake and eat it, too.
