Dodd Addendum Dangerous - 15 Feb 2009 -

The Chris Dodd addendum to the American Recovery and Investment Plan
of 2009, may prove to be the most transformational element within a
package touted by the Democrat leadership to be transformational for
America. Dodd, the Connecticut Senator, included a provision in the
stimulus package that will limit executive compensation for those banks
and institutions that have received TARP funds.

The compensation cap, could apply to as many as 25 of the highest
compensated executives within affected companies. The provision,
severely alters incentive compensation for senior executives in firms
that have historically provided competitive base salaries with
lucrative incentive plans. The provision, undermines the compensation
infrastructure of an industry that has provided performance based
incentives to attract, recruit and maintain the professionals that
comprise its executive and middle management ranks. 

Most corporations in America, large, mid size and small cap, provide
compensation in the form of  performance based incentive plans. These
programs are in place because they have proven over time to be
successful in optimizing results through the attainment of corporate
objectives.

 When people elect to pursue a career in the private sector, one of
the primary considerations in their decision, is compensation and the
opportunity to earn without the restrictions that are predominant in
the public sector. They recognize, that they can be a member of an
organization in which the goal is to optimize performance thereby,
optimizing profits for stakeholders and ultimately allowing them to
benefit individually.

The public sector, in the form of the federal government, has made
enormous inroads into American business since the advent of the TARP
fund. By providing capital to prevent the collapse of America’s
financial infrastructure, the government has now elected to create
policies that are ultimately socialist in nature. Not satisfied with
solely preserving our nation’s largest financial institutions the
government has decided they have the right to alter the structure and
policies of these institutions, in order to safeguard the American
taxpayer and their investment  in these institutions.

When the government begins dictating  policy on something as sacred
to business as its’ executive compensation practices , we have as
a captalist based society lost our way. At what point do we decide that
it is in the public interest to alter the compensation structure of
executives or middle managers in other industries. Business practices
tend toward migration from one industry to another. If  the Dodd
addendum is enacted into law we are on a path to become a nation of
mediocre performers that embraces government intervention in our most
fundamental business practices.