OBAMA wants 500K pay cap for execs whose companies receive bailout

[nickerjones]

http://news.yahoo.com/s/ap/20090204/..._executive_pay


good for OBAMA

[GirlySports]

This might be even worse. They'll just find another way to get the money and it won't be taxable income! Wouldn't you rather tax a guy making millions than a guy making 500000? People are sneaky. They'll get money through bonuses and under the table deals, and swiss bank accounts.

[nickerjones]

well true but dont you think that they are making money under the table now? Or how bout the execs running the company into the ground and walking away with 100 million bucks as severance....

There is always going to be shady people , doing shady things to make more money than they should. It has just been infuriating to see the pay grade of these guys and then to see them begging for a bailout..

[CaramonLS]

If you've proven you can't run a company (or rather, just run it into the ground), then you don't deserve to get paid like someone who does.

If I have 30 sports cars and declare bankruptcy, guess what? I don't get to keep those cars. The same should apply to these guys as well.

[The Ditch]

Originally Posted by CaramonLS

If you've proven you can't run a company (or rather, just run it into the ground), then you don't deserve to get paid like someone who does.

If I have 30 sports cars and declare bankruptcy, guess what? I don't get to keep those cars. The same should apply to these guys as well.

A corporation is considered a separate entity, so your argument isn't that good, because it's the corporation declaring bankruptcy not the CEO.



I also think their pay should be capped, seems ridiculous that they are going to issue themselves bonuses from taxpayer dollars when the company is doing terrible.

[worth]

They shouldn't have received taxpayer dollars in the first place!

[Table 5]

Originally Posted by worth

They shouldn't have received taxpayer dollars in the first place!

im starting to think that myself. While I do think that the financial's (and the real estate situation) have to be fixed before things get better, it seems like this whole industry has it's head so far up it's ass, it's just not worth giving them a dime. They really truly just don't get it.

[mykalberta]

Hahahahhaahha. If he means total compensation limited to 500k then it must be true what they say, living in the White House does kill brain cells.

Why dont we land on Mars and eat all the green cheese.

One of two things will happen.

1: Companies will not accept the bailout and instead declare bankruptcy there by getting rid of bad debt and unpaid recievables at pennies on the dollar.

2: These companies will implode as everyone worth running these things will take thier previously gained profits and start their own investment banks.

[I-Hate-Hulse]

Caps like these appeal to the average Joe, but can work against a bank by causing some of their best talent, usually expensive, to leave for places that are willing to pay them. Simple free market economics.

Put it this way - say for example, an investment banker makes the bank $72 million on a deal. Think it's worth it to pay out $10 million in bonuses? As a shareholder I'd say so.

Don't get me wrong, stupid decisions that make stupid losses should get zero. But to blanket all bank staff with this "cap" is really only going to cost the bank in the future.

(I can't believe I'm defending investment bankers. I feel dirty.)

[Bobblehead]

Scenario - a really good candidate has the coice of 2 jobs. One at an institution that received bailout money, one that didn't. Said another way, one where your pay will be capped at 500K, and one that won't be capped.

So this is going to make it much harder for those places to hire established executives.

Sure, if the execs are the cause of the problem and they don't like earning ONLY 500K, don't the the door hit you on the way out. But the honestly good execs aren't exempt from this. Companies that did not get bailout money are now going to find it much easier to hire established talent.

The more I hear, the more I'm sure no one learned any lessons from Japan. In their crisis in the 90s, they put onerous conditions their bailout money. That resulted in no banks wanting to take the money, so the credit crunch dragged on and on until the government loosened up.

This type of move sounds good. I understand the motivation. It makes good press. But it is counter-productive.

[HotHotHeat]

Originally Posted by mykalberta

Hahahahhaahha. If he means total compensation limited to 500k then it must be true what they say, living in the White House does kill brain cells.

Why dont we land on Mars and eat all the green cheese.

One of two things will happen.

1: Companies will not accept the bailout and instead declare bankruptcy there by getting rid of bad debt and unpaid recievables at pennies on the dollar.

2: These companies will implode as everyone worth running these things will take thier previously gained profits and start their own investment banks.

I fail to see why either of these options are bad. Let the companies reject the bailout funds. Better yet, let the CEO's quit and get some people with fresh thinking in there.

Someone forgot to tell me that $500,000 isn't a lot of money to approve decisions others have already figured out.

[Boblobla]

Originally Posted by I-Hate-Hulse

(I can't believe I'm defending investment bankers. I feel dirty.)

You aren't, you are defending the idea of a free-market economy. It's not like the banking industry is the only one with massive bonuses. The reason this is under the stoplight is because the bonus money isn't coming because of massive profits, it is from the taxpayers. It isn't the bonuses that irk me, it is when you find out they did things like $1,000,000 renovations to their office...

Oh well, LET THEM EAT CAKE.

[Canada 02]

so its not just a $500K cap; there are also restriction on stock options, and those options cannot be vested until the bailout money is paid back with interest

[mykalberta]

Originally Posted by HotHotHeat

I fail to see why either of these options are bad. Let the companies reject the bailout funds. Better yet, let the CEO's quit and get some people with fresh thinking in there.

Someone forgot to tell me that $500,000 isn't a lot of money to approve decisions others have already figured out.

Its about comparisons

Bud Selig of MLB made 17 mil last year.

And someone in Washington wants someone 1/34 as compitent to run what is essentially the backbone of the American economy (thats assuming we think Bud Selig is compitent)? Or for our Hockey fans, 1/12 as compitent as Gerry Bettman.

500K is alot of money. But 50 mil is more, if I had to choose betwen 500K and 50mil, I choose 50 mil.

[Bobblehead]

Originally Posted by mykalberta

Its about comparisons

Bud Selig of MLB made 17 mil last year.

And someone in Washington wants someone 1/34 as compitent to run what is essentially the backbone of the American economy (thats assuming we think Bud Selig is compitent)? Or for our Hockey fans, 1/12 as compitent as Gerry Bettman.

500K is alot of money. But 50 mil is more, if I had to choose betwen 500K and 50mil, I choose 50 mil.

Assuming you are compitent(sic).

[ikaris]

Originally Posted by mykalberta

Its about comparisons

Bud Selig of MLB made 17 mil last year.

And someone in Washington wants someone 1/34 as compitent to run what is essentially the backbone of the American economy (thats assuming we think Bud Selig is compitent)? Or for our Hockey fans, 1/12 as compitent as Gerry Bettman.

500K is alot of money. But 50 mil is more, if I had to choose betwen 500K and 50mil, I choose 50 mil.

It's actually quite simple. If you're asking for a government handout because you've failed at your job, you don't get any bonuses or extra compensation like Wall street so greedily just did with taxpayer money (something like 18 billion). The audacity of these idiots to actually give themselves bonuses for monumentally failing forced the Obama administration to do something.

As for the argument about 50mil versus 500k, well I would suggest that the people that were leading these companies into failure are going to have great difficulty getting jobs for 50mil moving forward.

On the other hand, if you're running a successful financial firm without the need for a handout, then no restrictions apply.

I can't see how anyone could argue on behalf of people who have blindly failed with such ignorance that its caused such a catastrophe. If you're trying to say that there will be good people unintentionally getting screwed, I consider all of them part of the failure (with respect to the financial institutions that are asking for a bailout) considering the current state of the financial system.

[Bobblehead]

Originally Posted by ikaris

It's actually quite simple. If you're asking for a government handout because you've failed at your job, you don't get any bonuses or extra compensation like Wall street so greedily just did with taxpayer money (something like 18 billion). The audacity of these idiots to actually give themselves bonuses for monumentally failing forced the Obama administration to do something.

As for the argument about 50mil versus 500k, well I would suggest that the people that were leading these companies into failure are going to have great difficulty getting jobs for 50mil moving forward.

On the other hand, if you're running a successful financial firm without the need for a handout, then no restrictions apply.

I can't see how anyone could argue on behalf of people who have blindly failed with such ignorance that its caused such a catastrophe. If you're trying to say that there will be good people unintentionally getting screwed, I consider all of them part of the failure (with respect to the financial institutions that are asking for a bailout) considering the current state of the financial system.

I don't think anyone is "argue on behalf of people who have blindly failed with such ignorance that its caused such a catastrophe." Those people should be turfed.

But wouldn't you then like to replace them with someone who ran a company that didn't need a bailout?

With a cap on the salary you can offer, good luck with that job search.

[octothorp]

Originally Posted by ikaris

It's actually quite simple. If you're asking for a government handout because you've failed at your job, you don't get any bonuses or extra compensation like Wall street so greedily just did with taxpayer money (something like 18 billion). The audacity of these idiots to actually give themselves bonuses for monumentally failing forced the Obama administration to do something.

As for the argument about 50mil versus 500k, well I would suggest that the people that were leading these companies into failure are going to have great difficulty getting jobs for 50mil moving forward.

On the other hand, if you're running a successful financial firm without the need for a handout, then no restrictions apply.

I can't see how anyone could argue on behalf of people who have blindly failed with such ignorance that its caused such a catastrophe. If you're trying to say that there will be good people unintentionally getting screwed, I consider all of them part of the failure (with respect to the financial institutions that are asking for a bailout) considering the current state of the financial system.

Right, but let's say there's a hypothetical where a company receives a bailout, sometime shortly before or after firing their CEO. That 500K limit is going to reduce the number of qualified individuals who would be willing to take this job, essentially giving these companies a competitive disadvantage against other, non-bailout companies. Which essentially means the government is reducing the likelihood of them recouping their investment.

Now, the other possibility is that this creates a situation where you attract individuals who are less concerned about getting a paycheck and more concerned about doing something meaningful and important; and it might be an incentive for these companies to forget about hiring the most high-profile candidate and instead hire the most appropriate and competent. I hope that ends up being the result of this legislation.

[ikaris]

Originally Posted by Bobblehead

I don't think anyone is "argue on behalf of people who have blindly failed with such ignorance that its caused such a catastrophe." Those people should be turfed.

But wouldn't you then like to replace them with someone who ran a company that didn't need a bailout?

With a cap on the salary you can offer, good luck with that job search.

What's the alternative? After seeing Wall street asking for a bailout in one hand, and then shortly after taking 18 billion of that and handing it out to the people that have failed, what other action can the government take?

[driveway]

I don't think there are a lot of people looking to move around in the financial markets right now. The chances of companies turning over their CEO's at the moment is probably pretty slim.