Unintended Effects of Stock Market Regulation

The House of Representatives recently passed the "say on pay" bill proposed by Congressman Barney Frank. The bill forces all corporations to allow shareholders a non-binding vote on CEO compensation. The idea is to shame directors into lowering CEO pay, which the bill's supporters claim is out of control.

My comments:

1. This is a big waste of tax payer dollars.

2. It will have the unintended consequence of providing incentive to corporations to figure ways to hide and sneak in pay to CEOs, thus increasing the risk of Enron like scandals.

3. It is useless. Shareholders who "shame" their companies' boards into cutting pay will see them lose talent. This will cause shareholders to not vote in the future.

4.This bill is nothing compared to the destructive Sabrenes-Oxley law, but it will help to continue the unintended consequence of that law: push companies to stay private, or go private via hedge fund buyouts. This will, over time, reduce the number of good public companies - hurting investors and retirement plans (who these laws are supposed to help).