Dutch to Curbe Excessive Executive Pay

This is a a good start on a very serious problem, and pay of Dutch executives is on the order of 1/4 that of US executives.

The Dutch finance minister, Wouter Bos, sent a bill to parliament to crack down on this, and I agree with his sentiments:

"I believe cohesion in society is not served by inexplicable inequalities," Bos said at a recent seminar of center-left politicians, held at a country-house hotel north of London. "Public support for entrepreneurship around the globe is eroded if you let this continue, and this is not in the interests of our economy or entrepreneurship."

His proposal would place a 50% tax on golden parachutes in excess of €500,000 (about $800,000), and, "would increase by 15 percent the employer tax contributions to company pensions for executives who make €€500,000 a year or more." (Not exactly clear on the specifics of Dutch pension law, so I would appreciate an explanation here)

In our system of economics, wages are very much a zero sum game, with a fixed pool of money for compensation, and the mega-compensation that exists takes money from everyone else.

I remember once running the numbers on Michael Eisner's $550 million pay package in the mid 1990s. It came to something like $6000 for every employee of Disney, and had that money been distributed to the employees, there would have been a payback in terms of less turnover and a higher quality employee that would have increased profits.

Of course, they find some rich guy, in this case Ad Scheepbouwer, who got a €1 million ($1.6 million) bonus to argue that it will create an environment unfriendly to entrepreneurs:

Scheepbouwer argues that the Dutch government now, with its proposed limits, is encouraging a climate that penalizes entrepreneurs.

"For really talented and really exceptional performers this is not a very attractive place," he said. "It is not accepted that people are outside the normal. The only people that are accepted outside the normal are musicians or football players."

The my answer:

1. These people are not entrepreneurs. They are highly compensated employees.
2. The "talented and exceptional" bit is largely a myth, as shown by the financial executives with billion dollar packages who are now failing abysmally in the financial world. People get to where they are because of connections and luck at least as much skill.
3. So you're telling me that you would not do it for €1 million/year? That you have to have €20 million, or €100 million, or €1 billion?

This is another toxic export of the American capitalism model, where highly compensated executives sit on each others' boards of directors, and vote each other raises.