Thursday, September 3, 2009


Hello again agents of change,

The new attachments on the right are the letters from the President and Vice president in support of our cause. We now have received over 50 letters from the House and Senate supporting the cause. The positive response from Mr. Feinberg is probably the most powerful because he is the appointed compensation Czar. We did receive 1 letter against our effort.

Lest we forget……….40 years ago a fortune 500 CEO worked one month to earn what the average employee makes in one year. Today the CEO works less than one day to earn what the average employee works all year to earn. At the current trend rate by 2014 the average CEO will make more on his lunch break than the average employee earns all year!

Although this is an injustice on the average worker due to the fact that total wages a company can afford to pay are finite, it is in no way class warfare because the abuse also takes its toll on the investing class—which includes the entire economic spectrum.

Some argue…..what about pro athletes that make $10 million per year. Totally different situation. The athlete receives his pay after intense negotiations between agent and owner. Insider compensation discussion takes place in a room ripe with conflicts of interest and quid pro quo. Not an arms length transaction at all.

Some ask ’what harm does it do’…….well let’s see….

(1) Creates a great tension between the heavy lifters and heavy thinkers which in turn de motivates many employees.
(2) Motivates our government to want to tax all wealth, even wealth earned through great personal risk that was necessary to help the country grow.
(3) Option programs motivate decision makers to take unwise risk and if the decision doesn’t work they merely re price the options.
(4) Excessive compensation lowers share price of US companies which costs everyone money on their retirement investments.
(5) If current methodology of arriving at pay structure for insiders goes unchecked the capitalistic system will collapse due to inequity.


Steve Hartnett
Member of grass roots movement
Against excessive insider compensation

Tuesday, July 14, 2009

Almost forgot….a new academic study was just completed that shows companies increasing market share and growing their asset base are UNDERPERFORMING companies (as judged by their share price) that are holding steady with asset base and market share. How can this counterintuitive fact be reality? In my opinion, the reason lies again with that nasty exec comp issue. Think about it. If an executive can grow his market share and asset base he can justify a bigger pay package. The problem is he usually does it by over paying for assets in ill conceived buyouts. If the company over pays for the asset the stock price suffers but he is now at the helm of a bigger ship so he demands more comp. Just another example of the incongruent reality of execs self interest and the companies best interest.

Agents of change,

Received a nice letter from VP Joe Biden. He was very encouraging to our efforts. No update on the Durbin bill yet. Hopefully it will be well conceived. It does address many of our concerns.

More to come.

Steve Hartnett

Monday, June 8, 2009

Change in the Law

Dear Agents of Change,

I apologize for my absence as I have been roughing it in beautiful Carmel California for a few weeks.

We have now received dozens of letters from lawmakers responding to our mail blitz.
The below bill (s. 1007) is a step in the right direction (as long as they don’t screw it up by adding junk to it). This bill follows a big part of our recommendation by requiring 60% shareholder approval if compensation exceeds 100 times the average employee.

Steve Hartnett

Senate Leader Introduces Bill Limiting Deductible Compensation
Issue: Executive/Deferred Compensation

Date: May 11, 2009

Action Taken: On May 7, the Senate Democrats’ second-in-command, Senator Richard Durbin (D-IL), introduced S.1007--the Excessive Pay Capped Deduction Act of 2009-- a bill that would impose a limit on the deductibility of compensation paid to any company employee. At the same time, he also introduced S.1006, a bill that would require a supermajority of publicly traded company shareholders to approve compensation payable to any company employees if that compensation package were to be in excess of the limit. The limit is 100 times the company’s average compensation.

Although passage is not imminent, because of Sen. Durbin’s stature in the U.S. Senate, S. 1006 and S.1007 convey a very strong “message” of where leaders of the Senate may wish to head in future tax legislative debates. The bills serve two purposes. First, they respond to public anger over perceived excessive bonuses paid to employees of some financial institutions. Second, S. 1007 could raise tax revenue to fund new programs.

Background: The Durbin legislation is intended to be comprehensive. It applies to all companies, regardless of their size or structure. It defines compensation as including wages, salary, fees, commissions, fringe benefits, deferred compensation, retirement contributions, options, bonuses, property and any other form of compensation identified by the Treasury Department. It includes part-time and partial year workers’ compensation (annualized) in the formula for calculating a company’s average compensation.

S.1007 also requires companies that are paying “excessive compensation” (amounts over the deductible limit) to report to Treasury. The report must include the amounts of compensation paid to the company’s lowest-paid and highest-paid workers, the company’s average compensation amount, and the number of workers who are being paid “excessive compensation.” The report must also include the amount of compensation being paid to those receiving “excessive compensation.” S.1007 would be effective after the date of enactment. The Senate Finance Committee has jurisdiction over the bill.

The Excessive Pay Shareholder Approval Act, S.1006, would require 60 percent of a publicly-traded company’s shareholders to approve any pay packages larger than 100 times the average compensation paid to the company’s workers. S.1006 is in the jurisdiction of the Senate’s Banking Committee.

Next Steps: The Durbin bills join the currently stalled legislative attempts to penalize “excessive” bonuses like those paid to AIG executives and the Finance Committee’s $1 million cap on deferred compensation. Tax insiders believe that when Congress turns its attention to tax legislation—whether because of the need to extend expiring tax provisions, or to address the problem of the scheduled expiration of the estate tax next year, or to raise revenue for healthcare reform—these executive and deferred compensation bills will be in the forefront of the debate. Timing is not yet clear, but most tax policy watchers on and off the Hill think tax legislation will start to develop sometime this summer.

Thursday, April 2, 2009

Surtax is terrible solution

Dear agents of change,

While government help to solve the comp inequities is dicey, without some input by gov I can’t see getting any traction. The gov knee jerk surtax on AGI was ill conceived and set back their credibility. Even though AGI was an outrage (paying $162 million in bonuses to the very guys who tanked the biggest insurer in the world), the solution must be crafted at the point of negotiating the contract.


Kenneth Lewis of Bank of America made $218 million over 6 years while the value of his company fell into an abyss. Like so many other CEO’s he fell into financial “group think” and was afraid he might be left behind.. Also his option package (like all others) loves risk and volatility.

Another quick example outside of banking…..$98 million to Howard Schultz of Starbucks in 07. His stock fell from 40 to below 10.

In addition to damaging capitalism, if we don’t fix this, our tax rates will be higher than they otherwise would be—for reasons to lengthy to list here.

Steve Hartnett

Agent for change

Tuesday, March 31, 2009

Short but wise message from my friend

What a profound short little paragraph that says it all!!!

"You cannot legislate the poor into freedom by legislating the wealthy out of freedom. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is about the end of any nation. You cannot multiply wealth by dividing it."

~~~~~ Dr. Adrian Rogers, 1931



Dear Agents of Change,

Many of you probably think I have way too much time on my hands, and you’re probably right. My passion for this cause is becoming somewhat of an obsession—did I see a collective head nod? Maybe you should just consider this a long tweet, or tweeter, or twitter, or hell, maybe just tolerate it because I’m a twit.

This message will be riddled with opinion so take it with a bushel of salt.

While our primary grass roots group mission is to curb executive pay excess, we are also trying to preserve capitalism, which is being attacked from many different directions, not the least of which is by groups wanting to socialize our system as a cure to the unfair relative pay issues we are targeting.

Lest we forget, the time proven denominator driving the American economy over the last 300 years has been our unique brand of capitalism. Individuals work hard, many taking great personal risk, investing their hard earned assets, with the hope of being personally rewarded in exchange for improving society’s quality of life. Socialism, on the other hand, is a failed brand of governance, designed to dilute personal reward in favor of the group, while lavishing riches on a tiny fraction of royalty at the very top. [Tom Kleuser sent a great email on the risks of socialism as played out in the classroom. Tom please send it to all, as it is ripe with wisdom].

So, on this crisp Sunday morning, forgive my unsolicited sermon linking capitalism and life’s design. Some of this rambling is redundant, very opinionated, and it was covered in previous emails and letters. Sunday seems appropriate for this essay because, as we were taught at Nolan, it’s God’s day. Undeniably, the concept of evolution is highly controversial and I will be the first to acknowledge I DON’T KNOW THE TRUTH [in fact, maybe I CAN’T HANDLE THE TRUTH!]. Like, our esteemed classmate Michael Matetich reminded me, regarding a different topic, ‘Only God knows for sure and he ain’t tellin’. But, as I think Mike would agree, he often leaves fascinating clues.

What I do know, or I think I know, is that we all are blessed with some common sense [hopefully], and have the God given ability to favor, probabilistically, certain propositions over others. Further, by way of background, often in my darker hours, I have read the New Testament word for word [paying particularly close attention to those words uttered by Christ himself] about 5 times [yea, that means I’ve been in the deep emotional shitter at least 5 times]. In that reading, filled with analogies and parables, I’ll be darned if I can find anything that rules out evolution.

Let’s Play School

At the risk of being struck down before I can complete this sentence, let’s PRETEND that our universe is a classroom project in some never-never land. We are the teachers [sweet revenge], and we have given our students—only two students—a class project with the following mandate…..‘Create a physical system, with units of life, designed to be self-sustaining, with the perpetuity of an infinitely repeating process.’ (What a mouthful!). After our two students display the requisite look of disbelief and disdain at a project sooooo time consuming, they resign themselves to the work. Of course, our job as teachers is to award grades, depending on the quality of that work [even sweeter revenge].

The first student, let’s call him Zeus, is brilliant but a bit lazy. He comes up with a system where on the first day he creates the stage for life and calls it the heavens and the earth. Then he becomes a bit fatigued, bored, and decides to take a break, do a little partying with friends [it was at this party he developed a lightning fetish]. Upon returning to his homework, he decides to create a little more each day, until on the sixth day he waves his substantial magic wand (where does he get those wonderful toys?…the Joker) and creates people, who stay the same through the history of the universe. Exhausted, he rests the 7th day. Wow! Quite spectacular, given current human prospective, but we must remember, in our little example, we are the GRAND teachers and must stay cool and not be so easily impressed. It looks so….well, common. Plus, we still have another student project to be evaluated before we issue Zeus a grade, and we like to grade on a curve… (Nightmare memories).

Our second student, let’s call him God, is much more thoughtful and ambitious in his design (woops! political reprimand….please mentally substitute His/Her wherever, I type His). His system is considerably more complex, and uses the language of mathematics to tie it all together (always his best subject in heaven). The complexity of his design is simple [oxymoron alert]. In God’s plan, if some life form is not working properly, no problem, it gets eliminated thru a lack of competitiveness; simple. But, if a complex species is successful, and in fact improving, often as a result of the random mutation brought on by recurring genetic dice rolls, the evolving result is truly magical. [God’s clever enough to fully understand that randomness on a massive scale is not random at all…..There he goes using that Math again].

God’s system begins with the simplicity of two miraculous elements, hydrogen and helium. These mysterious little buggers make up 98% of everything he needs for his project to succeed—he does spice it with a tiny fraction of other stuff. He then invents what has turned out to be the most mysterious, difficult to figure force in the universe, GRAVITY. Though Newton labeled it a force (because he suffered an apple headache), science, even today, can’t figure how or why it does what it does. But our brilliant student, God, knows. So after he creates hydrogen and helium he merely puts them in close proximity and then aided by the magical force of gravity, the materials start collapsing in upon themselves with a near infinite, runaway force*. As the mass became smaller the gravity becomes stronger and stronger until all the hydrogen, helium and stuff is condensed into a tiny seed with near infinite mass. (Boy, did you see the look on Zeus’s face when God revealed that little gem). Anyway, once this pin point of material reaches sufficient density, like a coiled spring it becomes unstable and explodes with a big bang (hmmm, where have I heard that?). This massive detonation sends his two elements hurling through a void, call it space, carrying the entire payload necessary to create the magnificent universe that contains all life. Thru bumps, chemical and nuclear reactions, and perturbations of all sorts, the material arranges itself in so many billions of configurations that some of those configurations become a friendly environment for life to prosper. (Drop the hubris and please notice the plural intent for life. As Jody Foster said in the movie Contact… ’if there aren’t other life forms out there it would be a terrible waste of space’. God is not wasteful.)

Eventually, given a nice environment, little, iddie-biddie single cells of life form. Bacteria are born. And, in the fullness of time these little guys become increasingly complex. (I hope our scientific classmate, Mike Boteler, cuts me a little slack with my reckless use of the facts). As complexity accelerates, God’s natural selection genius provides for weakness to be eliminated and strength to succeed and prosper. (Sound a little like capitalism?) If a life form cannot withstand the rigors of existence, no problem, it fades away and is replaced by life forms more resilient and capable of greater hang time. This progresses through time, ad infinitum, OR until certain life forms become so intelligent and powerful they are capable of “killing” the whole system [think super nuclear war]. But God even has a plan to deal with our destructive tendencies, by creating an expanding universe that eventually reverses course and collapses in upon itself he gets a do over every 100 billion years. [Hey, I’m not trying to flaunt my one and only course in astrophysics, but that is what I’m hearing at the physics water cooler]. As the system collapses, gravity, at the core increases to unimaginable intensity, feeding upon itself until it creates a series of mega black holes that unite, becoming one monstrous bully. A vacuum so colossal and a gravitational force so great, that all the matter in the universe is condensed into a space smaller than a pinpoint. As soon as this total collapse of matter and energy is completed, it again takes on the characteristic of an unstable coiled spring and explodes with a big bang, starting the process all over again; a perpetual system. God did it. He completed the parameters of our assignment.

As for Zeus, well, I guess he kind of did it to, I’m just not quite sure about the perpetuity part and I’m having a bit of problem with his magic wand deal.

You must give a grade.

Ok who do we give the best grade to? Whose system proves itself to be the most brilliant, all knowing, all powerful, etc. etc.? Even though, I am frightened by the Zeus talent with the thunderbolt thing, and afraid of being struck silly, I am going to award God an A+++ and proclaim his system superior. (Of course I will be wearing my rubber sole shoes when I do it).

Now, God knows we can’t understand the complexity of what he has done, so he uses a book filled with stories and parables to drive his points home. (Zeus copied God’s book and told everyone to take it literally).

Many of the forces unleashed by the explosion of hydrogen and helium are beyond our understanding, not the least of which is our spiritual life. God put that in there because he knew our ever increasing complexity needed a connection to a power source outside our physical world in order to be successful. (Also he wants someone to chat with thru eternity that appreciates his work). You can’t see this force of spirit, but then you can’t see gravity either. And just as sure as gravity sucks, universal law affords us the opportunity (thru prayer) to connect with his supernatural power and peace.

Finally, it is important we keep our spiritual house in order till the very end in order to gain all the fruits of eternity. His agent told us so. When we die our soul/spirit continues through eternity in the same state of peace (or lack thereof) it achieved in life. So I hope I don’t get caught napping, with the spirit out of kilter in the end, because the spiritual law like the law of gravity is automatic. It’s just natural law. Or is it super natural law? Whatever, it’s God’s law.

I want to stop now (and I know those of you stubborn enough to make it this far are praying I do), but now I’m supposed to tie this to capitalism. Begging your forgiveness I will save that for later (the sigh of relief is palpable).

Steve Hartnett

Member of grass roots movement
to preserve capitalism and reign in exec pay

*When a given piece of matter is condensed to half its original size it’s gravitational force is increased exponentially causing collapse, which in turn creates more force and further collapse. This process can continue until things get really, really small.

Post Script: Even though I don’t think any of us are atheist I am prone to argue with those that are. One story I like to use is …..If we went by spacecraft to a never visited, distant planet and found a functioning computer in a cave, would it be more likely that the computer was assembled by an intelligent force or by some unintelligent randomness. Aren’t life and the laws of the universe infinitely more complex than a computer? (Also, Einstein believed in God calling him an intelligent designer...and he was no naïve dummy)

Draft Notes:

God knows we can’t understand the complexity of what he has done so he uses the same people that Zeus used and the same book that Zeus used. The only difference is, in Zeus’s project the book is literal but in God’s it’s parabolic.

Both Zeus and God were thoughtful enough to give intelligent life forms what they called souls and they both split off a little chunk of themselves to create an agent named Jesus Christ to make sure we understood all the rules. Well, at least the Golden Rule. Now they both would have intelligent units [souls] to enjoy sharing eternity, and a cold one, with.

Ok let’s award the grades. Again at the risk of being struck silly I must go with God’s project as the best, and deserving of A+. Zeus did a fine job and I award him a B. I know this blasphemy flies in the face of how many interpret creation but it’s just my opinion.

With Zeus’s love of lightning we must be careful of how we break the news to him or we risk becoming toast

Now, one of our brainiac life forms—a Benjamin Franklin, or Brother Ed type—call him John Doe, in a moment of clarity, creates the system of economic capitalism that closely mimics God’s plan [he figured there wasn’t much chance of improving it]. This system grants personal gain to all those who contribute things deemed valuable by the group. The more valuable to the group the greater the personal gain. Just like in the grand scheme of creation, strength is rewarded and weakness is discouraged. [God gave us a sufficient dose of compassion that we cannot help but have a safety net to prevent total failure, although it may be our undoing].

Although I have never been quite sure why many Christians are threatened by the Creators use of evolution as a brilliant tool, I am sure I will be attacked by many creationalists among us. This is a good thing because I admit I DON’T KNOW THE TRUTH. I am merely stating an opinion that makes the most sense to me. Other little hints have been dropped supporting evolution in that we all have a tailbone that only makes sense if our ancestors had tails or the appendix is only provides a benefit to life on all fours.