Hillary Clinton understands this. "When you see that you've got CEO's making 300 times what the average worker's making you know the deck is stacked in favor of those at the top," she's said in her presidential campaign.
And she's taken direct aim at executive stock options.
"Many stock-heavy pay packages have created a perverse incentive for executives to seek the big payouts that could come from a temporary rise in share price," she said in July. "And we ended up encouraging some of the same short-term thinking we meant to discourage."
Yes, we did. Specifically, her husband and his economic team did.
Case in point: In 2014, pharmaceutical company Mylan put in place a one-time stock grant worth as much as $82 million to the company's top five executives if Mylan's earnings and stock price met certain goals by the end of 2018.
But the executives would get nothing if the company -- whose star product is the EpiPen allergy treatment -- failed to meet the target. Almost immediately, Mylan began stepping up the pace of EpiPen price increases. The price of an EpiPen two-back doubled to $600 -- a move Hillary Clinton has rightfully called "outrageous."
Stock options doled out to Wall Street executives in the early 2000s didn't exactly encourage good behavior, either. They contributed to the near meltdown of the Street and a taxpayer-funded bailout.
Now that Wall Street is no longer restrained by the terms of the bailout, it's back issuing stock options with a vengeance.
According to a recent report from the Institute for Policy Studies, the top 20 banks paid their executives over $2 billion in performance bonuses between 2012 and 2015. That translates into a taxpayer subsidy of $1.7 million per executive per year.
Hillary Clinton has proposed penalizing pharmaceutical companies like Mylan that suddenly jack up the prices of crucial drugs. And she's promised to go after big banks that make excessively risky bets.
These are useful steps. But she should also consider a more basic measure, which would better align executive incentives with what's good for the public.
It's doing what her husband pledged to do in 1992, if elected president -- but which his economic advisers then sabotaged: Bar corporations from deducting all executive pay in excess of $1 million. Period.
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