# No bailout exec can earn more than $500,000. Good idea? **URL:** \ **Category:** Great Debates\ **Created:** [February 4, 2009, 2:53pm UTC](https://boards.straightdope.com/t/no-bailout-exec-can-earn-more-than-500-000-good-idea/484413 "2009-02-04T14:53:23Z")\ **Posts on this page:** 20\ **Page:** 8
**Author:** ![VinylTurnip](https://avatars.discourse-cdn.com/v4/letter/v/b2d939/32.png) [@VinylTurnip](https://boards.straightdope.com/u/VinylTurnip)\ **Post date:** [February 6, 2009, 6:43pm UTC](https://boards.straightdope.com/t/no-bailout-exec-can-earn-more-than-500-000-good-idea/484413/141 "2009-02-06T18:43:02Z")
> [@xtisme](#): > > Perhaps the new magic job maker thingy will also staff the new company with some of the horde of low paid but very talented CEO’s in waiting, ehe? As a hoary technophobe, I’m skeptical of the NMJMT— I’d prefer to continue granting lavish compensation to all existing CEOs, to avoid alienating the precious handful who might actually deserve it. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [February 6, 2009, 6:43pm UTC](https://boards.straightdope.com/t/no-bailout-exec-can-earn-more-than-500-000-good-idea/484413/142 "2009-02-06T18:43:45Z")
There are lines of back stabbing corporate flunkies waiting in line to install their management teams and have their turn at looting. But when a corporation loses 21 billion in its last quarter ,how does an exec deserve a bonus? He should be fired. How much damage do you have to oversee before it is clear something is wrong? ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [February 6, 2009, 7:09pm UTC](https://boards.straightdope.com/t/no-bailout-exec-can-earn-more-than-500-000-good-idea/484413/143 "2009-02-06T19:09:18Z")
> [@xtisme](#): > > I’m confused here. Wouldn’t the magic job making machine that originally formed those companies just do it’s thing and create a new business (better, to be sure)? Perhaps the new magic job maker thingy will also staff the new company with some of the horde of low paid but very talented CEO’s in waiting, ehe? > > -XT The “magic job making machine” you are referring to is entrepreneurs and competant businessmen who decide to buy up cheap equipment from the failed bloated businesses to start their own new businesses. They will probably staff their new companies with people who already have experience in the industry. ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [February 6, 2009, 7:59pm UTC](https://boards.straightdope.com/t/no-bailout-exec-can-earn-more-than-500-000-good-idea/484413/144 "2009-02-06T19:59:16Z")
[QUOTE=msmith537] The “magic job making machine” you are referring to is entrepreneurs and competant businessmen who decide to buy up cheap equipment from the failed bloated businesses to start their own new businesses. They will probably staff their new companies with people who already have experience in the industry. [/QUOTE] Well…sort of. That’s certainly what I would mean. However, I suspect that some folks actually think that these companies grow on trees and that really, anyone COULD make them…it’s just that the fat cat rich folk do in order to keep the masses down. Or something. Yeah…if the companies go TU then many of them will be restructured or absorbed by someone else. I’m a big fan of survival of the fittest in the market place…which is why I think bailouts are a bad thing, ehe? -XT ---
**Author:** ![XT](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/xt/32/456_2.png) [@XT](https://boards.straightdope.com/u/XT)\ **Post date:** [February 6, 2009, 10:06pm UTC](https://boards.straightdope.com/t/no-bailout-exec-can-earn-more-than-500-000-good-idea/484413/145 "2009-02-06T22:06:24Z")
Thought I’d include [this](http://www.cnn.com/2009/POLITICS/02/06/smick.bailout/index.html) article from CNN into the discussion: > [@](#): > > But here’s how Washington really works. The reason for Obama’s public campaign is that soon officials are likely to hand the banks a taxpayer-funded bailout potentially worth trillions of dollars. Therefore, what’s happening here is the creation of old-fashioned political cover. > > The administration needs this cover because it faces a horrible choice. At issue is how the Treasury arrives at a price for the banks’ toxic assets in any bailout package that entails taxpayer funding. -XT ---
**Author:** ![Martin\_Hyde](https://avatars.discourse-cdn.com/v4/letter/m/47e85d/32.png) [@Martin\_Hyde](https://boards.straightdope.com/u/Martin_Hyde)\ **Post date:** [February 6, 2009, 10:11pm UTC](https://boards.straightdope.com/t/no-bailout-exec-can-earn-more-than-500-000-good-idea/484413/146 "2009-02-06T22:11:33Z")
> [@Little\_Nemo](#): > > You’re missing a big point. These guys aren’t at the top of their field. This is like Matt Millen going to William Ford last December and insisting he gets a raise or he walks. > > These guys don’t deserve $6,100,000 salaries. They probably don’t deserve $500,000 salaries but we’ll be charitable. But if they start acting entitled we should tell them the door’s that way and we can find hire a chimp to sit in your chair and he’ll probably get better results than you did last year. But who are “these guys”, from my reading of this restriction it applies to whoever is CEO at a bailout company; meaning if they’ve long since fired the guy that ran the company in the ground they can’t pay the new guy more than $500,000 no matter how qualified he is. ---
**Author:** ![Martin\_Hyde](https://avatars.discourse-cdn.com/v4/letter/m/47e85d/32.png) [@Martin\_Hyde](https://boards.straightdope.com/u/Martin_Hyde)\ **Post date:** [February 6, 2009, 10:14pm UTC](https://boards.straightdope.com/t/no-bailout-exec-can-earn-more-than-500-000-good-idea/484413/147 "2009-02-06T22:14:23Z")
> [@tagos](#): > > Yes. The facts speak for themselves in the hundreds of billions. Incompetents or crooks. There are no other options. So you’ve just said there’s not a single CEO in the world who is anything other than an incompetent crook? How can you legitimately post on a forum like this, that vaunts the open exchange of ideas, with an unwaveringly absolutist position like that? ---
**Author:** ![begbert2](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/begbert2/32/3357_2.png) [@begbert2](https://boards.straightdope.com/u/begbert2)\ **Post date:** [February 7, 2009, 1:10am UTC](https://boards.straightdope.com/t/no-bailout-exec-can-earn-more-than-500-000-good-idea/484413/148 "2009-02-07T01:10:11Z")
> [@Martin\_Hyde](#): > > So you’ve just said there’s not a single CEO in the world who is anything other than an incompetent crook? How can you legitimately post on a forum like this, that vaunts the open exchange of ideas, with an unwaveringly absolutist position like that? Stick around a while - this is _hardly_ the most unwavering absolutist postion you’ll find around here. ---
**Author:** ![Der\_Trihs](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/der_trihs/32/233_2.png) [@Der\_Trihs](https://boards.straightdope.com/u/Der_Trihs)\ **Post date:** [February 7, 2009, 1:17am UTC](https://boards.straightdope.com/t/no-bailout-exec-can-earn-more-than-500-000-good-idea/484413/149 "2009-02-07T01:17:50Z")
> [@xtisme](#): > > I’m confused here. Wouldn’t the magic job making machine that originally formed those companies just do it’s thing and create a new business (better, to be sure)? Perhaps the new magic job maker thingy will also staff the new company with some of the horde of low paid but very talented CEO’s in waiting, ehe? And then they’ll probably get eaten up by a bigger corporation and the “horde of low paid but very talented CEO’s in waiting” will get collectively fired to make room for the golfing buddies of the CEO and the Board of Directors of the bigger company. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [February 7, 2009, 2:20am UTC](https://boards.straightdope.com/t/no-bailout-exec-can-earn-more-than-500-000-good-idea/484413/150 "2009-02-07T02:20:19Z")
Our CEO pay has become distorted . They are way ,way over paid. That was true when they were able to convince fools that they actually knew what they were doing, and the companies appeared to be making money. It was smoke and mirrors. They were setting up a system to enrich themselves. They were selling the creation and movement of debt. They were scammers and should be fired. How can you reward yourself a multiple million dollar bonus when the company is losing billions and on a highway to disaster? Oh wait ,because they are irreplaceable financial geniuses. Yeh right. They should be in jail with Madoff. ---
**Author:** ![Evil\_Captor](https://avatars.discourse-cdn.com/v4/letter/e/f17d59/32.png) [@Evil\_Captor](https://boards.straightdope.com/u/Evil_Captor)\ **Post date:** [February 7, 2009, 12:59pm UTC](https://boards.straightdope.com/t/no-bailout-exec-can-earn-more-than-500-000-good-idea/484413/151 "2009-02-07T12:59:49Z")
> [@Martin\_Hyde](#): > > Like I said, CEOs are greedy egomaniacs. I don’t see very many of them doing this. They **don’t have to** , unlike “the plebes.” That’s the truth of a capitalist system, the rich are going to be able to weather the storms better than the poor–sorry, that’s just the way it is. You can’t change that fact no matter how much you want to, degrading the management quality of a company is no way to improve the company. OK, Martin, you are almost to the point of understanding the left. We know that’s how the system works. We hate that it works like that. We want to change it. We would like the poor to weather the storms just as well as the rich. Social safety nets and all those things you hate. We think it can be done. It will be done. It might take some time, but that overall is the direction that civilization is moving in. Conservatives are just so many boulders in front of the glacier. > [@](#): > > These guys **can and will walk away** , thousands of their employees cannot. The first thing any manager will tell an employee is that “everyone is replaceable.” It’s as true for CEOs as it is for assistant managers. As a whole, the CEOs in the financial sector have fucked up royally. Give some new guys with fresh ideas and better scruples a chance. This notion that we should be worshipping these CEOs was bogus when the financial industry scams were still working. Now that they’ve collapsed, anyone can see that financial sector CEOs are, as a class, irresponsible fools. Sorry if you don’t like it, but the evidence is irrefutable. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [February 7, 2009, 5:01pm UTC](https://boards.straightdope.com/t/no-bailout-exec-can-earn-more-than-500-000-good-idea/484413/152 "2009-02-07T17:01:19Z")
[http://www.scotsman.com/latestnews/Axe-falls-in-RBS-boardroom.4957304.jp](http://www.scotsman.com/latestnews/Axe-falls-in-RBS-boardroom.4957304.jp) Here’s an article about Royal Bank of Scotland. They are going through the same arguments there. But their execs, while horribly overpaid, are not at the level of our execs. The execs argue that while they are losing billions, they should just get smaller bonuses instead of none. They should get a smaller award for destroying the bank than they normally get. The argument fails me. If You screw up .you are in the street looking for a new job. They feel screwed over if they don’t get the millions they feel they are entitled to. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [February 7, 2009, 9:49pm UTC](https://boards.straightdope.com/t/no-bailout-exec-can-earn-more-than-500-000-good-idea/484413/153 "2009-02-07T21:49:22Z")
> [@Evil\_Captor](#): > > OK, Martin, you are almost to the point of understanding the left. We know that’s how the system works. We hate that it works like that. We want to change it. We would like the poor to weather the storms just as well as the rich. Social safety nets and all those things you hate. We think it can be done. It will be done. It might take some time, but that overall is the direction that civilization is moving in. Conservatives are just so many boulders in front of the glacier. Yes, you would like a system that basically just pays people regardless if the work they do is valuable or even if they work at all. I can never figure out why you Liberals think that the government is the best and most fair allocator of resources. > [@Evil\_Captor](#): > > The first thing any manager will tell an employee is that “everyone is replaceable.” I’ve never had a manager say that. I’ve never told anyone that as a manager. It’s not something they teach you in business school or in any management training program. ---
**Author:** ![EddyTeddyFreddy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/eddyteddyfreddy/32/18796_2.png) [@EddyTeddyFreddy](https://boards.straightdope.com/u/EddyTeddyFreddy)\ **Post date:** [February 7, 2009, 10:34pm UTC](https://boards.straightdope.com/t/no-bailout-exec-can-earn-more-than-500-000-good-idea/484413/154 "2009-02-07T22:34:35Z")
[State Street Bank](http://www.boston.com/business/articles/2009/02/06/state_streets_pay_cuts_will_begin_at_the_top/) is slashing compensation for executives, starting at the top: > [@](#): > > State Street Corp., saddled with billions of dollars in sagging investments, rolled out a plan yesterday to fatten its capital cushion by slashing the dividend, cutting bonuses, and directing more money into conservative investments. > > The plan, cheered by investors, comes at a cost to many people. Exhibit A: State Street chief Ron Logue, Boston’s highest-paid banker, took a direct hit to the wallet. > > A day after President Obama rolled out his plan to cap pay at $500,000 for bankers who take government bailout money, Logue told investors that State Street had slashed incentive compensation for most of the company’s employees. The biggest loser, by far, was Logue himself. > > State Street says the cuts in incentive pay for 2008 save $278 million, before taxes. Nearly all of the employees who qualify for the compensation, and that’s most of the people who work at State Street, will see it cut in half. But the company’s top five executives lose it all. For Logue, that means millions. > > [snip] > > State Street’s incentive pay cut fits the profile. It is part of a broader plan to bolster the company’s balance sheet and assure investors worried that investment problems were putting the institution in an increasingly risky position. Those problems and investor fears had driven State Street shares from over $83 to as low as $15 in the past year. But investors reacted well to the news yesterday, pushing the stock up $3.41 to $27.54. > > The plan: Fatten up State Street’s capital cushion, without diluting the interest of existing stockholders by selling new shares. The company cut its quarterly dividend to the bone, which will save about $400 million a year, and plans to move some of its own investments into ultraconservative government bonds. > > [snip] > > Logue, speaking yesterday at an annual event for investors and stock analysts, said State Street was trying to come up with a reasonable compensation plan for the year ahead. Most of its incentive plans dole out extra money based on revenue and profit growth, which probably won’t exist in 2009. > > A lot can happen between now and the end of the year. But the immediate elimination of 2008 incentive money for State Street’s top executives is a good start. > > Logue and his top managers had become more aggressive to increase profits, believing the real risk was minimal. They were wrong, and now they’re paying a real price. Notice that the bank’s share price rose on this news. ---
**Author:** ![gonzomax](https://avatars.discourse-cdn.com/v4/letter/g/e8c25b/32.png) [@gonzomax](https://boards.straightdope.com/u/gonzomax)\ **Post date:** [February 7, 2009, 10:40pm UTC](https://boards.straightdope.com/t/no-bailout-exec-can-earn-more-than-500-000-good-idea/484413/155 "2009-02-07T22:40:23Z")
Compared to the capitalistic distortion that we have evolved into, the government is a far more reasonable allocator of everything. It actually has input from people who are not absorbing all the wealth for themselves.Corporations are not democracies. They are dictatorships of the powerful and rich. The distribution of the corporation wealth is terribly distorted. I was going to say the profits . it does not matter if they make money, they will still carve out a chunk of the corporation to enrich themselves. When they eliminate jobs ,they make a lot more money. When they escape environmental problems ,they make more money. When they ship jobs, patents ,technology ,and entire industries abroad,they make more money. What a fine system. If they avoid taxes they make more money. ---
**Author:** ![msmith537](https://avatars.discourse-cdn.com/v4/letter/m/d9b06d/32.png) [@msmith537](https://boards.straightdope.com/u/msmith537)\ **Post date:** [February 8, 2009, 12:01am UTC](https://boards.straightdope.com/t/no-bailout-exec-can-earn-more-than-500-000-good-idea/484413/156 "2009-02-08T00:01:39Z")
> [@gonzomax](#): > > Compared to the capitalistic distortion that we have evolved into, the government is a far more reasonable allocator of everything. It actually has input from people who are not absorbing all the wealth for themselves.Corporations are not democracies. They are dictatorships of the powerful and rich. The distribution of the corporation wealth is terribly distorted. I was going to say the profits . it does not matter if they make money, they will still carve out a chunk of the corporation to enrich themselves. When they eliminate jobs ,they make a lot more money. When they escape environmental problems ,they make more money. When they ship jobs, patents ,technology ,and entire industries abroad,they make more money. What a fine system. If they avoid taxes they make more money. Yes, companies exist to make money. God forbid. And they are much more tied to economic reality than government. Government will legislate and tax and spend according to the whims of the people, building bridges to nowhere and paying people to sit on their ass collecting benefits. Corporations do the same thing but eventually the economics will take care of waste if people let it. The problem is that people are mostly lazy and stupid. They hate the corporations for their greed one minute but then they demand the government protect their jobs the next, essentially rewarding the very behavior they don’t want. The so called “looting” you people talk about has been a common one for a long time. In business school we called them agency issues. How do you ensure that your management is acting in the best interest of the company and not their own short term financial interests? Keep in mind that government doesn’t make anything. Everything you see around you was created by some company formed by some entrepreneur. ---
**Author:** ![Deeg](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/deeg/32/2955_2.png) [@Deeg](https://boards.straightdope.com/u/Deeg)\ **Post date:** [February 8, 2009, 12:03am UTC](https://boards.straightdope.com/t/no-bailout-exec-can-earn-more-than-500-000-good-idea/484413/157 "2009-02-08T00:03:24Z")
If we assume that the bailouts are inevitable and that the execs are partly or mostly to blame for their company’s mismanagement then I’m totally in favor of the limits. I don’t want to set up incentives for execs where they can artificially boost their company’s fortunes and then get a government funded reward when it all collapses. I’m generally not in favor of the bailouts but if they are going to happen then this seems as an intelligent way to do it as possible. ---
**Author:** ![Deeg](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/deeg/32/2955_2.png) [@Deeg](https://boards.straightdope.com/u/Deeg)\ **Post date:** [February 8, 2009, 12:05am UTC](https://boards.straightdope.com/t/no-bailout-exec-can-earn-more-than-500-000-good-idea/484413/158 "2009-02-08T00:05:14Z")
> [@gonzomax](#): > > Compared to the capitalistic distortion that we have evolved into, the government is a far more reasonable allocator of everything. I unequivocally disagree. Mao’s _Great Leap Forward_ was far more disastrous than the current financial melt-down. ---
**Author:** ![Der\_Trihs](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/der_trihs/32/233_2.png) [@Der\_Trihs](https://boards.straightdope.com/u/Der_Trihs)\ **Post date:** [February 8, 2009, 1:18am UTC](https://boards.straightdope.com/t/no-bailout-exec-can-earn-more-than-500-000-good-idea/484413/159 "2009-02-08T01:18:29Z")
> [@msmith537](#): > > Yes, you would like a system that basically just pays people regardless if the work they do is valuable or even if they work at all. No, that’s what the Right wants - for the people at the top at least. The Left just doesn’t want ordinary people to have their lives destroyed. > [@msmith537](#): > > Yes, companies exist to make money. God forbid. And they are much more tied to economic reality than government. Perhaps companies are, but CEOs and the rest of the higher ups AREN’T. Quite often they get rewarded in the inverse of economic reality, in fact. They don’t even need to worry about elections like a politician does - even if the company fails their buddies in the next company over will hire them. At least Bush isn’t going to be made President of Canada. > [@msmith537](#): > > Keep in mind that government doesn’t make anything. Everything you see around you was created by some company formed by some entrepreneur. Garbage. Government makes and maintains a great many things. Nor are “entrepreneurs” all that huge a force in the corporate world; mostly, corporations are run by parasites. > [@Deeg](#): > > I unequivocally disagree. Mao’s _Great Leap Forward_ was far more disastrous than the current financial melt-down. Ah, the “Anything but the far right is Communist !” routine. Obama isn’t Mao, any more than modern CEOs are as bad as Old South slave plantation owners. ---
**Author:** ![Martin\_Hyde](https://avatars.discourse-cdn.com/v4/letter/m/47e85d/32.png) [@Martin\_Hyde](https://boards.straightdope.com/u/Martin_Hyde)\ **Post date:** [February 8, 2009, 1:20am UTC](https://boards.straightdope.com/t/no-bailout-exec-can-earn-more-than-500-000-good-idea/484413/160 "2009-02-08T01:20:49Z")
> [@Evil\_Captor](#): > > OK, Martin, you are almost to the point of understanding the left. We know that’s how the system works. We hate that it works like that. We want to change it. We would like the poor to weather the storms just as well as the rich. Social safety nets and all those things you hate. We think it can be done. It will be done. It might take some time, but that overall is the direction that civilization is moving in. Conservatives are just so many boulders in front of the glacier. I don’t have any problem with social safety nets; but you’re living in a dream world if you think we’re moving away from free markets. As China has transitioned into a market economy you’ve seen pretty much the last major vestige of the failed idea of planned economies disappear. As long as there’s a free market there are going to be winners and losers. There will never be a society where the poor can “weather the storm” as well as the rich, unless you do away with the rich entirely. As I’ve pointed out though, we’re moving _away_ from such ideas, not towards them. I’m fine with us making sure the poor don’t starve in the streets during economic downturns, but there’s never going to be a world where the lower class will have the option of retiring to their mansion in Cayman Brac when the Fortune 500 company they were running goes under. > [@](#): > > The first thing any manager will tell an employee is that “everyone is replaceable.” It’s as true for CEOs as it is for assistant managers. As a whole, the CEOs in the financial sector have fucked up royally. Give some new guys with fresh ideas and better scruples a chance. This notion that we should be worshipping these CEOs was bogus when the financial industry scams were still working. Now that they’ve collapsed, anyone can see that financial sector CEOs are, as a class, irresponsible fools. Sorry if you don’t like it, but the evidence is irrefutable. There’s many bad CEOs. But generally speaking a CEO is more a “big ideas” man than a micro manager, for this reason sometimes even the best CEOs won’t be able to singlehandedly save a company when the economy is going down the drain. Some industries you are extremely vulnerable to market fluctuations. I agree that financial sector CEOs “as a class” have recently made some colossal missteps, but I fail to see how these companies are best served by not being able to bring in good people. These caps, from what I’ve read, would apply to _new hires_ as well, people that may not have even worked in the financial sector prior to this. [Previous page](https://boards.straightdope.com/t/no-bailout-exec-can-earn-more-than-500-000-good-idea/484413.md?page=7) [Next page](https://boards.straightdope.com/t/no-bailout-exec-can-earn-more-than-500-000-good-idea/484413.md?page=9)