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

[HotHotHeat]

Originally Posted by badnarik

How do you know whether a CEO getting paid 500K is going to do a better job than someone willing to do it for a sandwich and some coffee?

I surely don't know, but there must be some criteria certain people meet to command higher pay.

I'm sorry, but you're missing the point. I understand that compensation should be relative to the responsibilities of the job, and to be honest I'm not sure the corporate world has ever put together the 'perfect' CEO compensation structure. That said, handing out bonuses to retain employees that have mismanaged a company seems to fly in the face of common sense at any level. Nevermind if the funds used to payout those bonuses are public.

[HotHotHeat]

Originally Posted by SeeGeeWhy

http://www.portfolio.com/news-market...-Caps-Bad-Idea

Money, Whitney notes, is what motivates people to come to Wall Street. It's not a public service job, nor should it pay like one.

He's right, it's just a private sector job that uses public funds to support it.

Socialism for the rich and capitalism for the poor. Awesome.

[Daradon]

Originally Posted by Bobblehead

Put it in an NHL context.

The Coyotes are going down the drain. The NHL is covering their payroll. So Betteman says, "No salaries above $1 million until you pay us back".

While I'm sure they will have a few great young players emerge, do you think they will ever be competitive? Will they be able to sign any quality free agents?

How will this help them pay the NHL's money back?

Hmmm, this analogy doesn't jive with me.

I don't think there is THAT much difference in talent between bankers or banking students.

It's not a Cale Hulse vs Nik Lidstrom sort of thing.

It's more like a Cale Hulse vs Wade Belak sort of thing. Especially since they proved that the 'best minds' were in it as thick as the others.

There has been a feeling that the disparity of income that investment bankers make has been luring people away from joining other important fields anyway.

For instance, why go to Harvard medical school to become a surgeon and help people when you can go to Harvard business school and make 10-100 times as much and not have to worry about death?

No, this is a very good idea. It's going to have some problems yes, but you just don't get rewarded when you screw up. Sorry.

[EddyBeers]

Originally Posted by HotHotHeat

He's right, it's just a private sector job that uses public funds to support it.

Socialism for the rich and capitalism for the poor. Awesome.

That is the American way, get with the program....trickle down economics, tax cuts on the top end, deregulation on the top end which inevitably leads to better wages and working conditions at the bottom end, jobs will be created, prosperity and happiness will flow. If you are at the bottom end, just dodge the terminal illnesses and you too could work until you are 80, basking in the glow of the man on the hill's largess...

[edn88]

I am probably in the camp that setting a cap on sr. management salaries will drive them away to other areas. But in this case, I am thinking - where are they going to go in this economy? Who is going to give them that compensation (especially when they have not proven their ability to run a company).

When I look at the CEO of my company, who probably makes $10M+ per year, although I think it is more than any human needs to earn, I also think that if he is running out company properly, adding shareholder value and keeping thousands of people gainfully employed he should be rewarded (and to me, a guy that can do this, is worth more than any sports figure). Now if you cannot do those things (add shareholder value, keep people employed) then you should not get a bonus (and maybe need to be replaced by some one that can).

[mykalberta]

I think we need to wait to see how this plays out. There is no way 500K is total compensation.

If that is salaries for directors with a defined preformance bonus plan - then i have no problem with it.

[Flame On]

Isn't it only for companies that choose to accept bail out funds? Surly if you've done a good job and your company can stay afloat or is doing well, you wouldn't accept the funds and thus limit your execs pay.
If you accept them anyway or need them then you are also accepting them with strings. Pretty simple isn't it?

[ikaris]

http://money.cnn.com/news/specials/s...lement/ceopay/

Really puts it into perspective. Executives that have failed so miserably, begging for taxpayer money received ridiculous amounts of compensation.

And yes, this cap only applies to the institutions that have asked for a bailout.

[mykalberta]

Do you really think 20 mil or under is alot of money for someone in charge of banks worth 50bil+

I agree the Goldman numbers are crazy, but they are no longer is buisness so.

Also, alot of the base salaries are close to that 500K mark anyways.

[HotHotHeat]

Originally Posted by mykalberta

Do you really think 20 mil or under is alot of money for someone in charge of banks worth 50bil+

I agree the Goldman numbers are crazy, but they are no longer is buisness so.

Also, alot of the base salaries are close to that 500K mark anyways.

I wonder if Obama's tried that argument as justification for a pay hike yet?

Yes, $20 million is a lot of money for any one person, regardless of their responsibilities. This money is compensation for the successes they've played a role in. What successes?

[ikaris]

Originally Posted by mykalberta

Do you really think 20 mil or under is alot of money for someone in charge of banks worth 50bil+

If they are a bunch of Gordon Geckos that have led us to this mess, then yes I do think it's a lot of money for incompetence.

[SeeGeeWhy]

From Jan 24 - 30th's Economist, special report on finance, pp 3.

"The monument to Soviet central planning was supposed to have been a heap of surplus left boots without any right ones to match them. The great bull market of the past quarter century is commemorated by millions of empty houses with no one to buy them. Gosplan drafted workers into grim factories even if their talents would have been better suited elsewhere. Finance beguiled the bright and ambitious and put them to work in the trading rooms of Wall Street and the City of London. Much of their effort was wasted. You can only guess at what else they might have achieved."

Seemed relevant to the discussion of how the lure of top salary attracts the best - but the question is - does acting in such self interest actually best serve the needs of society? (As the efficient capital theory of economics would suggest).

I might argue that this pain in the financial system may lead to a greater understanding of why we haven't seen increased stability with greater financial sophistocation - leading to even more robust and prosperous global capital market systems.

People seem to forget that the last 25 years have been pretty damn prosperous globally. China lifts 1,000,000 people out of poverty per month... that's staggering.

[pepper24]

If it's only for companies that accept TARP then I am ok with this. Tax payers shouldn't be on the hook for bad managers.

[LChoy]

Honest question, but how does one get to become a CEO of a large company? It's not like there is a job ad recruiting for a CEO. Even those guys that drove the banking industry to the ground, had to be identified as a rising star and demonstrate some sort of talent or ability to reach that level of success

[Bobblehead]

Originally Posted by Lchoy

Honest question, but how does one get to become a CEO of a large company? It's not like there is a job ad recruiting for a CEO. Even those guys that drove the banking industry to the ground, had to be identified as a rising star and demonstrate some sort of talent or ability to reach that level of success

Why would you say that?

http://www.higherbracket.ca/jobViewF...p?job_id=26556

[HotHotHeat]

Originally Posted by Bobblehead

Why would you say that?

http://www.higherbracket.ca/jobViewF...p?job_id=26556

I just applied.