In a move which should concern every citizen, especially every private business owner, the Obama Administration is requiring all companies with contracts or subcontracts under the American Investment and Recovery Act (ARRA) with more than $25 million in annual gross revenues from the Federal Government and 80% of annual revenues from government contracts or loans to report the compensation of its five most highly compensated employees. Liberals who tout the virtues of protecting privacy and conservatives who tout liberty should be outraged by this regulation. This is a slippery slope where everything that is tied to the Federal government must be “fair” in the eyes of some regulator in Washington.
There is no useful purpose for this information other than to penalize, intimidate, and embarrass the management of highly successful businesses which may be compensated in a way Obama’s bureaucrats deem as “unfair and excessive.”
While it is unknown how many the companies fit the profile which would be required to make these disclosures, it is also unknown why the information is necessary since there is no adverse consequence in the bidding process for high or low compensation of management.
Under the regulation now in place, privately held, that is non-public companies, are now required to disclose the following information regarding their compensation practices of management:
“(1) Salary and bonus.
(2) Awards of stock, stock options, and stock appreciation rights. Use the dollar amount recognized for financial
statement reporting purposes with respect to the fiscal year in accordance with the Statement of Financial
Accounting Standards No. 123 (Revised 2004) (FAS 123R), Shared Based Payments.
(3) Earnings for services under non-equity incentive plans. Does not include group life, health, hospitalization or
medical reimbursement plans that do not discriminate in favor of executives, and are available generally to all
(4) Change in pension value. This is the change in present value of defined benefit and actuarial pension plans.
(5) Above-market earnings on deferred compensation which is not tax-qualified.
(6) Other compensation. For example, severance, termination payments, value of life insurance paid on behalf of
the employee, perquisites or property if the value for the executive exceeds $10,000.” (FAR 52.204-11) “
This provision should scare all liberty and privacy loving Americans! Why does the government need this information? How could this information be used? A contracting officer could look at this information and decide to award a project to a company that has a “fairer” compensation plan. This information could be held by the government to create a profile of its vendors and write regulations that only allow awards to companies that have CEO pay is reasonable. Management could be embarrassed when the information is leaked to the media or politicians who could then use it to intimidate or blackmail management. The government has no right or beneficial purpose for this information. Do you think the government is concerned about the underpayment of management? Absolutely not. The Obama Administration wants to put limits of all executive pay as it did today with the TARP recipients and now proposed by the banks. Now, private companies, who under law have all the rights of individuals are being forced to disclose private information about themselves to perform a good or service to the Federal government.
The government should be concerned about the price and qualifications of the vendor, not whether the founder of the company, who has risked his life savings, has a life insurance policy set up so he can pass wealth to the next generation or put a rental property in the name of the company. The government has no right to know compensation of an owner or manager in a privately-held, privately-financed company.
Who is next?
Will doctors be required to report their salaries to get Medicaid funds?
Will farmers be required to disclose their salaries to get FDA approval?
Will radio talk show hosts be required to disclose their salaries to use the public airwaves?
Where does the madness end?
This is one more Obama provision which leads us to total control in every element of our lives by the Federal government and Americans need to wake up to the Smiling (Marxist) Revolution that is taking place in our country’s time of economic crisis.