It’s not like they’ve been having a great season. Maybe the sidelines is where they belong.
The rules will apply to the top 5 execs. That is too weak. There are hundreds of mid level execs pulling down multiple millions in salaries. The big boss will change the chart to make him no. 6. They will get around it.
This is a feel good move. We are getting weary of being looted . Should we limit the auto workers to 500 thou a year? They actually produce a product .
In my opinion, the bailout was a big mistake and most of these execs are damn near criminals. However, this is entirely the wrong approach. The problem is that the way large corporations are set up, the board can pretty much give themselves whatever salaries they damn well please, and of course they’re all in bed with each other so they’ll pocket as much as they can. And these are the same guys going to parties with the politicians, which is why this proposal is among the most toothless, deceptive ideas I’ve heard in a while. “Yeah, a half a million cap, that sounds great, stick it to those greedy bastards!”
Except that they don’t actually care. Stock options, expense accounts, “corporate” cars/houses/planes, they’re going to get pretty much the exact same compensation as before, except it won’t be quite as obvious. This entire argument is just a giant red herring. What actually needs to be done is the rules need to be altered to give control back to the shareholders so that they can rein in these massive excesses. Of course that will never happen because the politicians don’t want to screw over their executive buddies.
Nobody is talking about putting twentysomethings fresh out of business school in charge.
There are plenty of experienced people who’ve worked in upper management circles who you could place in charge and who gladly work for $500,000 a year.
As for the whole, “Well they don’t have executive experience” argument - isn’t that the same line of BS the Republicans tried to feed us about why Sarah Palin would be a good VP?
If this is the case, then the $500K limit is really just a publicity stunt. Stocks are often preferred compensation anyway, since they fall under capital gains rather than income.
The lure is still there for experienced CEOs to absolutely make a killing if they turn a company around.
You should up the voltage.
Oh, I’m not disputing that the government CAN do this if it want’s too. As you say, if they are giving the money then they can certainly set any type of conditions they want. Leaving aside the irony wrt the fact that the government itself both needs many of these businesses to actually continue and not go tits up, as well as the fact that the government had a hand in the current situation (and the even more ironic aspect that now the government is going to try and ‘fix’ a problem they helped create), my response there was not really directed towards this question but was a question to 'luci (who chose to reply with some nearly incomprehensible response that seems completely disconnected from my question to him). My point wasn’t if the government COULD do this…but whether it’s a good idea.
I think it’s a bad idea for the government to involve itself in this and attempt to set salary caps on executives in some misguided attempt at punishing those responsible (but not themselves of course). Well, that and to score points with the loony lefties who think this is a smashingly good idea. But I ALSO think it’s a bad idea for the government to be doing these bailouts in any case, so it’s sort of an academic point to me.
-XT
Serious question then…why aren’t they being hired NOW? Why weren’t they being hired to fill these positions for the last year? I mean, if these guys are as qualified AND they are willing to work for so much less than these worthless CEO’s then why aren’t companies (ever mindful of the bottom line) dumping high priced executives and going with better and cheaper replacements? Especially if there are plenty of these folks out there?
-XT
Politicians got punished by the traditional means - they got voted out of office and had to find real jobs.
And I don’t think cutting executive pay back to a more reasonable level is looney leftism - American executive salaries are far higher than global standards. American corporate boards have created a system where there’s no connection between performance and salary and executive pay balloons up without any limits. It was okay to look the other way when they were playing with their own company’s money but now that’s no longer the case. As part of accepting a bailout, they should have to accept more rational business practices.
As for the rationale of the bailouts, I likened it once to your neighbour’s house catching fire. It might have happened because he smoked in bed all the time and it was his own fault. But you still have to go over and help him extinguish the fire because otherwise it’ll spread and burn down the neighbourhood including your own house.
Ever mindful of the bottom line? if thats what you see good for you. They made trillions by creating and buying and selling debt. What a country. Only they could not hold back when they had the chance to loot the system. How was the bottom line served when they gave hundred million dollar bonuses? Do you suspect someone would have worked for the paltry sum of 20 mill. ?
SOME of them did. Others did not. Unless you are under the impression that the only ones at fault were those who got voted out…or that this entire mess was Bush’s fault and now that he’s gone everything is cool.
YMMV…I very much think this is a loony lefty meme, though it’s got some traction these days with as frustrated and worried as people are. As for American salaries being out of line with the rest of the world…well, so what? American SALARIES are somewhat out of line with those of the majority of the world. American sports athletes salaries are out of line of those of most of the rest of the world as well. Our salaries are what they are and I’m not too keen on the government sticking their thumb into this issue to ‘fix’ it based on…well, based on gods know what. Feelings. Emotions. Dart boards. Polls.
So, you are deriving some benefit out of helping him out, yes? So, if I tell him ‘I’ll help you out but from now on you can’t smoke anymore inside’, then you don’t feel that is somewhat hypocritical since I HAVE to help him? Since I’m pretty much going to insist on it in fact?
-XT
Because the overlords who have until now run the corporate world don’t want to upset the status quo. Hell, if I were making $50 million in compensation I wouldn’t want to be making waves about cutting back exeuctive pay either, even if it were to help the company’s bottom line.
It almost seems to be human nature to use all that you have. If you have a bigger house, you fill it up with more furniture and stuff, and if you have more money you tend to spend more as well. Dedication to saving is usually expressed as a percentage of income we vow not to spend, rather than everything we take in beyond a certain point.
As a died-in-the-wool leftist who was active in local Southern California socialist politics for a while on my return from Germany, I instinctively think it’s long overdue, yet also acknowledge the point that Cliffy makes. Nevertheless I think it could have a positive, stimulative impact in two main ways. First, it will force these companies to distribute such income among more employees at the middle, and hopefully lower, levels as well. Putting a significant amount of additional money into the hands of many employees seems to me much more likely to stimulate the economy, and will motivate them to perform better on the job.
Secondly, the usual argument in favor of outlandishly large compensation packages is that they are necessary to retain the hotshots and rainmakers who can bring in revenue. But it might be the best stimulus possible if some of those hotshots chafe at the bit and decide to launch out on their own instead. Then they’ll need office space, personnel, supplies, and everything else that a new business needs to get started. Would that not have a significantly large positive impact on the economy?
Its pretty rare for a person to be on the board of just one company. Also, the shitheads who run a company into the ground often do not have any trouble leaping from one failed company to another. Why anyone would hire someone who ran a company into the ground to manage theirs is a mystery to me, but it happens all the time.
Nor are these CEOs liable to get significantly better terms if they go work for an overseas corporation. The US has the highest paid CEOs in the world. In other nations, the top execs will make something like 20 times the average salary of an employee of the company, while in the US, the figure is around 400 times the average employee salary. The head of Toyota only makes around $1 million a year.
If your company is failing, even if its not your fault, the honorable thing to do, is to cut your own salary, while cutting those underneath you. Its good for morale, if nothing else, and in a company that’s having tough times, good morale is a very scarce commodity. The only thing wrong with requiring execs to take a paycut to get federal aid, is that the execs weren’t willing to do it on their own.
However, lets take a hypothetical here, for a moment. Say CEO Moneybags looks at having to take a $500K/yr salary as an insult, and decides to leave. It is unlikely that he’s going to be able to go to another company and make more than that, right now. So what’s he going to do? Odds are, he’s not going to be an “idle” rich boy, who jets around the world and hangs out with movie stars. He might do that for a while, but, as has been noted, CEO-types tend to have large egos, and these egos tend to only get fed when they’re running a company. If he can’t find a company willing to pay him what he wants, he’s going to start his own company, if for no other reason than he needs tons of lackeys around him telling him that he’s some kind of super genius. Is this not good for the economy? Even if all he’s doing is selling repackaged turnip twaddlers, he’s going to be employing people who otherwise might not have a job (or one that doesn’t pay as well as his current job).
This is supposed to help the economy recover how, exactly?
Seems like window-dressing to me.
That is hardly President Obama’s fault. He was not in charge when the first round of funds were disbursed.
I don’t buy it. Mainly because generally speaking I’m of the opinion that “cemeteries are full of people who thought they were indispensable”, as they say. As a result, I don’t believe for an instant that, amongst 6 billions of humans, there’s only an extremely limited pool of individuals able to head a major corporation, and consequently that they must be offered ludicrous salaries. Especially when said supposedly extremely rare and talented individuals failed in such a spectacular way, when faced with a crisis that many much more ordinary people were expecting.
Besides, I used to be aware of the exact amount the person heading a major publicly owned French corporation was making. And it was, 10 years ago or so, much less than $500 000. And very highly qualified candidates weren’t lacking for this job. Oh! And they didn’t ran said corporation into the ground.
I agree. In my world, lawmakers hold a greater responsibility for corporate glut. After all, they are supposed to represent the public and promote the common good not help corporations maximize profits.
I don’t think the government should regulate pay for private firms, but publicly traded firms are the governments business, especially when stock holders are deceived and marginalized. The new breed of CEO is under the impression that the corporation works for him.
The government should cap executive pay as a matter of public policy and create a tax structure that discourages excessive executive compensation and encourages reinvestment in the firm. When pay isn’t tied to long term performance, what incentive do executives have to make the firm more efficient and productive?
Well I have worked in hotels in Chicago where a GM makes $325,000 a year and the DOS and controllers make $250,000 a year.
And these people just top line management of a big hotel in a big company. So you know the execs are making A LOT more.
The key word is EARN.
Look at CEOs in NYC, many have packages that give them free rent, free cars, free club membership, free meals, some even have packages where they continue to use these services long after they leave.
Big deal there are tons of ways to get around the “EARN” part, with bonuses, stock options, money put into your kids college funds.
Whenever someone tries to stop someone from getting money, the accountants just figure out a way around it.
And obviously we didn’t have the best minds heading the companies, since they’re in trouble. So, the process that put them at this place for this salary failed. Why should I assume that it’s the best system? The issues with it (inbreed CEOs sitting in each other boards and approving each other raises, for instance) are known, and have been known and discussed long before the current crisis. Why should I believe it will work better in the future? What an incompetent tool could do that would be worst than bankrupting the company, or in the case of Iceland, the whole country?
I’m perfectly willing to look out of the aforementioned current inbred pool of CEOs for people willing to work for the paltry sum of $500 000, and would feel perfectly justified to have a say in the matter if my taxes had been used to keep the company afloat.
And I don’t believe for an instant that something remotely similar to the invisible hand of the free market is at work when we’re talking about the CEOs of major international corporations, their selection, and their salary, anyway. We’re not talking about shoes retailers, here.
$500,000 is just the amount they’re allowed in salary. They can get as much as they want in stock, AFAICT. And when the companies pay off all their government bailout money, the stock will probably go up, right?
So if these guys are so smart and so good, they should be thrilled with this deal. Take a half-mil in pay but boatloads of stock, which is in the shitter right now so they can get lots of it. Then, when the government is paid off and their stock is way up, thanks (of course) to their brilliant, multi-million dollar minds, they’ll be rolling in dough.