Nightly News Features Critic, But No Defenders of Corporate Pay

     Start with a report on an SEC rule change, add a splash of outrage over high corporate salaries, mix in a liberal activist whos donated thousands to liberal candidates for public office, and you have a classic evening news cocktail of economic misreporting. Thats what NBCs Anne Thompson served up Nightly News viewers with her Jan. 17 story on proposed rules the SEC is considering on how corporations report compensation of top executives.

     Thompson noted that the new rules should help shareholders have a more accurate picture of what they're paying the company's leaders. The NBC chief financial correspondent showcased the Corporate Librarys Nell Minow, who insisted Capitalism is not for sissies and shareholders have simply got to step up to the plate and say this is too much.

     But Thompson did not alert viewers to the leftward leanings of the Corporate Library or Minows $5,200 in donations the past four years to the DNC and presidential candidates John Kerry and Howard Dean, as recorded by The business reporter also left out concerns from business leaders like John J. Castellani about how disclosing too much salary information could undermine a companys competitiveness.

     Castellani, the president of the Business Roundtable said in a Jan. 17 statement that while new disclosing requirements are acceptable in theory, his organization wants to make sure that the disclosure rules do not reveal to competitors strategic information about compensation tied to a companys business goals or product development plans. While absent in Thompsons report, Castellani is hardly obscure, he appeared alongside Minow on PBSs Jan. 17 NewsHour and his statement was quoted in a front page article in the Jan. 18 New York Times.

     Thompson also missed a golden opportunity to explain just why executives earn so much more than the average employee: their unique value to the company as executives produces what is called economic rent.

     Unlike traditional rent, the income from hiring out land or other durable goods, economic rent is a measure of market power: the difference between what a factor of production is paid and how much it would need to be paid to remain in its current use, according to Economist magazine. The British periodical illustrated the principle with an example drawn from pay for professional athletes, but the principle applies for other highly-talented workers with unique leadership or personalities, such as corporate executives and even national network reporters like Thompson.