I think the fly in the ointment is that you can’t assume that the CEOs will be more concerned about saving their company than their own personal wealth. What’s to stop them from saying “screw the bailout, I’m taking the company down and I’m going to drain it for every last nickel before it does”?
Most executives only have a vested interest in the company because of their compensation; reduce that dramatically and they can simply say “I’m already a multi-millionaire, I don’t need to do this job for 1/10th my previous pay.” You’re not punishing them at all, many of these guys could quit working today and they’d have more money in the bank than most Americans will see in their entire lifetimes.
When looking at people who could fill these positions, while some qualified and good executives might be willing to work for $500,000/year; how many of them will be willing to work for that when non-bail out companies offer them 5x as much?
If the goal is to insure the companies go under, then why bail them out in the first place? I understand the populist desire to punish the fat cats, but sorry, they’re already millionaires. They’re rich whether they work another day or not, you’re really not punishing them, you’re punishing the company they work for–a company that probably employs thousands of people and those are the ones who will have trouble making their mortgage payment if they lose their job, not the CEO.
Fractions are easier if you are looking at this realistic. Setting up an arbitrary ‘$500,000’ figure is both meaningless and silly. Some executives make a lot of money (directly)…some make a lot less but are compensated via stock options or other things. Some have both options. Some have other options. The point being there is no set salary for an ‘exec’, so it’s going to vary pretty wildly. For some getting $500,000 directly may actually be a step up.
As for your second point, sure…some politicians who had a hand in this fuckup are out of a job. However, many are still there chugging along (and ironically trying to ‘fix’ the problem they had a hand in making). Some executives who had a hand in their own misfortunes for companies who are requesting a bailout are probably gone now too…while some remain. So…are you saying that if a company has a whole new set of executives in management that they shouldn’t be subject to this arbitrary $500k cap?
-XT
A bailout doesn’t work if your terms are so outrageous that nobody is willing to take the money. I’d be extremely surprised if there was a single bank in the United States where the management thought so poorly of their chances of survival that your offer was the better choice.
If they can’t live on $500,000 than I’d simply say sayanora and don’t let the door hit you on the way out. In this job market, I can’t imagine it’d be too difficult to find competent people, who would be thrilled at the prospect of raking in half-a-mil per year, to replace them.
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](Obama talks tough on CEO pay - Feb. 4, 2009)
We’ll also note that executives can be compensated above that limit, but only with stock that cannot be sold until after the company has paid back the government. So, they’ll still get obscene paydays, just after they’ve paid the govenment back. It’s hard to see why there would be a brain drain here, after all you get cash to carry you through the tough times and nice pile to roll around in after you get things back on track. Unless, you’re not smart enough to get things back on track, in which case, losing you isn’t really brain drain, is it?
Doesn’t matter. Most of the companies that have received money already will be back for more.
For many of these thieves their standard of living is so high that their millions will disappear. Some have several mansions around the world and their property taxes should be enormous. Some spent like it would last forever. I am for firing the lot. They do not have any secrets and they have shown what deeds they are capable of. Fuck them.
Maybe, I guess we’ll have to see. A big problem though, is that the health of a company is often times based on investors perceptions of said company. If some one is placed in the CEO position of a failing company because the previous big money guy left due to the salary cap, and this person has no executive experience and is clearly in the position solely because it’s a big pay raise for him and no one else wants it–how does that affect investor confidence?
Listen, I’m not saying lots of CEOs making millions a year didn’t fuck up. Some of them fucked up royally, many of them wasted millions of dollars on frivolous shit. However there’s also the other side of the coin, sometimes a company gets fucked over by the ravages of the free market and the company’s management doesn’t really deserve any of the blame. The trouble Continental Airlines found itself in after 9/11 was genuinely simple “bad luck.” Anyone who has ever been in business for themselves understands that there are certain conditions you can’t control.
I think a salary cap is a bad idea. The companies have not helped themselves by having lavish retreats and using bailout money to buy other companies, ect. So I doubt that congress will have a hard time selling this idea to the country. I assume the CEO’s are the best and brightest or the companies would have sent them packing long ago. These companies took advantage of idea that Fannie and Freddie were too large to fail and that they were backed by government. So, while they certainly are still partly responsible, government was not blameless in this mess.
Sure thing, if that’s what you want to do. How do you feel about the workers at these companies who will lose their job if the company has to fold because investor confidence hits all time lows?
I understand the anger, and I understand the class envy, but the simple truth of the matter is (for better or worse) you can’t punish these guys without punishing the thousands of ordinary Americans who work for them. I’m not sure how to get around that fact.
But these guys are patriots, no? Hell, most of them are Republicans, and you can’t get more patriotic than that, what with the patriotic lapel pin and all! I’ve no doubt…none!..that these patriots will take one for their country, and will rush to sacrifice a bit of financial comfort for the sake of their country and their countrymen!
Me? Tequila and bongwater, why do you ask?
It will be interesting to see how this plays out. My guess is that the word of the day will be…unintended consequences.
(Yeah, I know that’s two words but I love doing that)
-XT
Good. Let them leave. They’ve already proven themselves to be, at best, incompetent and at worst, criminal. Fuck 'em. The quicker we can get them out of the system the better. Best if they leave voluntarily. That way the angry mobs have fewer miscreants to track down while carrying hot tar and feathers.
Every one of those execs are replaceable . If they died in a plane crash the last few years they would have been seamlessly replaced in hours. They are not part of the solution, they are the problem. Many financial experts kept telling us we were headed for disaster while these thieves recklessly continued.
The average tenure for these execs is like 2 1/2 years. How can that tell you they are absolutely necessary.
I don’t like salary caps. I don’t like federal funds tied to political positions like a drinking age limit or funds ostensibly there to keep the economy going. If we want to stick it to the assholes it is time to start punishing people properly for wiping out the savings of millions of customers. A guy stabs someone and gets death row, but wipe out investments of millions of people looking to retire and nothing happens.
It’s an arbitrary number that is not tied to any scale. If a large bank pays $2 million and a smaller bank pays $1 million then there is no relation to the salary cap. It would be like limiting All government salaries to $125,000.
Maybe the new agreement allows for deferment of taxes until any future appointments to the White House.
If every one of them is worthless and easily replaceable, why aren’t they replaced? Especially if they are easily replaceable for someone who would be better AND would demand a lot less money?
-XT
Of course! The chief executive of a company would rush to fire the chief executive of the company if he…oh, wait. I think I see a bit of a problem…
You never heard of a board of directors or stockholders, have you? You actually don’t know how businesses run…do you?
-XT