The compensation plan for the President of the United States has remained unchanged for a long period of time. It is overdue for an overhaul. I look at it in much the same way that I would for any Chief Executive of an enterprise, in this case the “enterprise” is our nation. The shareholders of our nation are its taxpayers. They have bought their shares with tax dollars and are paying for the benefits received by all its inhabitants.
Over the last 30 years I have chaired many compensation committees for companies big and small, public and private. In structuring any compensation plan for a Chief Executive, it is important that it align his/her interest with those of the shareholders of the enterprise. Sadly, the President’s pay plan does not do that and is severely out of date. There is much room for improvement. So it is that I propose the following compensation plan; one that has both contemporary and appropriate features.
Firstly, I propose that we should raise his salary from $400,000 to $1 million per year. His current salary is too low and has not kept pace with his responsibilities.
Secondly, all top executives have an incentive compensation component to their pay which is based on performance. He should have a bonus plan that provides an opportunity for him to earn up to 100% of his salary based on the results that he is able to achieve.
The President is the only American wage earner that does not pay taxes. This seriously misaligns his interest with those of his “shareholders”. Like all other Americans, he should pay Federal and State income taxes and be subject to the Alternative Minimum Tax.
The President gets many other benefits that misaligns his interest with those of taxpayers, among those is free housing. How can he relate to the issues of homeowners with mortgages if he is not in the same “boat”? He should pay a fair market rate of rent for the housing provided to him by tax payers. His rent should reflect the size, location and quality for the housing provided to him and his family.
In order to align his interest with ordinary Americans, his rent should be characterized as mortgage interest and be deductible in the same manner as other homeowners in his tax bracket.
Any benefits that he receives from the government, such as food, personal travel, healthcare benefits, etc. should be placed on his W-2 in the same manner that it is for other tax payers. As the nation’s Chief Executive, he should have the use of the corporate jet, so long as it is for legitimate business purposes. This makes his valuable time more productive, as it does for any leader. If he uses it for personal travel or campaign travel, he should be charged the standard first class airline rate.
He should be entitled to a 401K or other retirement plan, to which he should contribute, like the rest of us. A matching contribution by his employer would also be appropriate. The amount of his retirement fund should be based on his years of service, as it is for other executives.
Now back to that bonus. Good incentive compensation plans for executives are performance based and his should be also. The bonus payout should include the following criteria:
(a) Executives are not paid bonuses for running businesses that lose money or acquire bad assets on their balance sheet and neither should he. So his bonus should be conditioned on operating his enterprise (the US Government) without losses.
(b) Also, he should be rewarded for running a government that causes the nation to be prosperous (and the citizens to benefit thereby). Accordingly, I propose that his bonus be awarded on a sliding scale between zero and 4 percent in GDP growth at which he would receive his full 100% bonus, conditioned on item (a).
(c) In order to avoid gaming the system (as many Wall Street execs did) the bonus award should be a multi-year program tied to a few years that follow, even if they are on a successor’s administration. The plan should have a claw back and carry forward provisions to assure that good performance in one year is offset/averaged-out by any losses or benefits in the following years.
(d) In regard to item (a) above, if he comes into his job inheriting a loss, he should be given credit for improvement above that level (i.e. reducing the loss).
Such a compensation plan would align the President’s interests with those of his citizen tax payers and reward him for good behavior and good performance. Individuals that are not shareholders (i.e. not taxpayers) should not be entitled to vote, just as people that have no investment in a company’s shares are not entitled to vote on the affairs of the enterprise. If they are entitled to vote, they will always vote for something that provides them with benefits that someone else will have to pay for.
Over the last 30 years I have chaired many compensation committees for companies big and small, public and private. In structuring any compensation plan for a Chief Executive, it is important that it align his/her interest with those of the shareholders of the enterprise. Sadly, the President’s pay plan does not do that and is severely out of date. There is much room for improvement. So it is that I propose the following compensation plan; one that has both contemporary and appropriate features.
Firstly, I propose that we should raise his salary from $400,000 to $1 million per year. His current salary is too low and has not kept pace with his responsibilities.
Secondly, all top executives have an incentive compensation component to their pay which is based on performance. He should have a bonus plan that provides an opportunity for him to earn up to 100% of his salary based on the results that he is able to achieve.
The President is the only American wage earner that does not pay taxes. This seriously misaligns his interest with those of his “shareholders”. Like all other Americans, he should pay Federal and State income taxes and be subject to the Alternative Minimum Tax.
The President gets many other benefits that misaligns his interest with those of taxpayers, among those is free housing. How can he relate to the issues of homeowners with mortgages if he is not in the same “boat”? He should pay a fair market rate of rent for the housing provided to him by tax payers. His rent should reflect the size, location and quality for the housing provided to him and his family.
In order to align his interest with ordinary Americans, his rent should be characterized as mortgage interest and be deductible in the same manner as other homeowners in his tax bracket.
Any benefits that he receives from the government, such as food, personal travel, healthcare benefits, etc. should be placed on his W-2 in the same manner that it is for other tax payers. As the nation’s Chief Executive, he should have the use of the corporate jet, so long as it is for legitimate business purposes. This makes his valuable time more productive, as it does for any leader. If he uses it for personal travel or campaign travel, he should be charged the standard first class airline rate.
He should be entitled to a 401K or other retirement plan, to which he should contribute, like the rest of us. A matching contribution by his employer would also be appropriate. The amount of his retirement fund should be based on his years of service, as it is for other executives.
Now back to that bonus. Good incentive compensation plans for executives are performance based and his should be also. The bonus payout should include the following criteria:
(a) Executives are not paid bonuses for running businesses that lose money or acquire bad assets on their balance sheet and neither should he. So his bonus should be conditioned on operating his enterprise (the US Government) without losses.
(b) Also, he should be rewarded for running a government that causes the nation to be prosperous (and the citizens to benefit thereby). Accordingly, I propose that his bonus be awarded on a sliding scale between zero and 4 percent in GDP growth at which he would receive his full 100% bonus, conditioned on item (a).
(c) In order to avoid gaming the system (as many Wall Street execs did) the bonus award should be a multi-year program tied to a few years that follow, even if they are on a successor’s administration. The plan should have a claw back and carry forward provisions to assure that good performance in one year is offset/averaged-out by any losses or benefits in the following years.
(d) In regard to item (a) above, if he comes into his job inheriting a loss, he should be given credit for improvement above that level (i.e. reducing the loss).
Such a compensation plan would align the President’s interests with those of his citizen tax payers and reward him for good behavior and good performance. Individuals that are not shareholders (i.e. not taxpayers) should not be entitled to vote, just as people that have no investment in a company’s shares are not entitled to vote on the affairs of the enterprise. If they are entitled to vote, they will always vote for something that provides them with benefits that someone else will have to pay for.
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