Dean Baker apparently likes a proposal from Barney Franks that would require corporations to have non-binding polls of their shareholders on CEO compensation packages. I like the idea too. But this claim by opponents of this proposal strikes me as stupid:
According to Marketplace Radio, the opponents of this measure claim that shareholders have diverse interests and aren’t in a position to properly assess CEO compensation.
When I consider what stocks to put in my portfolio, I consider two things: expected return and systematic risk. I would suspect most shareholders consider these two attributes. Is that what these opponents consider to be “diverse interests”? Maybe we should only consider expected return and just ignore risk. After all, that’s how the good folks think about privatization of Social Security – consider only the expected returns to stocks and ignore their risk. We investors who do consider risk are not as advanced, I guess.