Oh Snap! Obama To Cap Executive Pay At Bailed Out Companies!

[miraclesrule]

OH SNAP...
WTG MsCushion

 

[mrscushion]

I just wanted to come back to say that I did not mean my previous post in a condescending way -- I'm not trying to imply that your talents are a dime a dozen, tradergirl, you've clearly made a lot of money for your firm. It's just that I think that, generally speaking, a lot of people with great financial industry resumes and far-above-average skills are looking for stability over max compensation right now, at least till the crisis ebbs. This pay cap doesn't have to be in place forever. For the time being, I just don't buy the "all the talent will flow elsewhere" argument.

 

[tradergirl]

You don''t have to buy it. You''re not in the market for it.

 

[tradergirl]

Confirmed. Pay Caps are a Joke. (Just mugging for the cameras)

http://clusterstock.alleyinsider.com/2009/2/confirmed-executive-pay-caps-are-a-joke

 

[MaggieB]

Date: 2/5/2009 8:00:07 AM
Author: tradergirl
You don''t have to buy it. You''re not in the market for it.

You are right. If someone performs really well in their position and they are penalized for circumstances they had nothing to do with, that''s unfair. Kind of like the thousands of people that are being laid off right now despite performing well in THEIR positions . . . while executives still reap huge bonuses.

I reread your posts a few times, and it doesn''t seem as if you actually work for one of the companies that is capping salaries so you are not being affected, and that the point of your post seems to be to inform us that you are still highly desired in the job market! Congratulations!

 

[violet02]

I know a LOT of people that made a LOT of money for their companies that were laid off. I also know there are a LOT of excecutives that receive exorbitant bonueses every year.

I think about this in two ways.

1) If you''re a highly paid ''executive'' (not a regular employee) and you''re at a company beidng bailed out I would think you could forego the bonus, raise etc this year to help your company out. If it were me, I honestly can''t imagine quitting because I didn''t get a bonus this year when my company is in dire straits. If I do, then I do, I go elsewhere but a company in financial trouble can''t afford to be tossing out gigantic bonuses for a failing business. Sorry it''s just common sense. So Sony for example said their top 3 execs weren''t going to take their bonuses and other execs were going to get a bonus and salary cut. http://www.iht.com/articles/2009/01/22/business/sony.1.php And honestly are there that many companies out there trying to hire overpaid execs right now? Where''s the greener pasture for folks like that??

2) Sure bonuses are important. It''s good to reward people for doing an exceptional job. Otherwise what are you really working for? We all work to earn money and work really hard to earn more money each year. At my company we have a freeze on raises this year to save money but we still have bonuses to reward really hard workers. The ''you''re lucky to have a job so deal'' mentality is very true in some senses but very discouraging too. Of course as I said in 1. if I was at a company being bailed out I wouldn''t expect raises, bonuses or anything else honestly. Honestly the ''i make a ton of money for the co. so reward me'' attitude is totally fine, IF you''re not in a company that the governement is bailing out with our tax dollars.

Anyways this is about executives being affected... not all employees and not every company. And sure I may not know exactly how much a paycap will help or not but I sure feel better about the situation when I know we''re not just giving out this money for ''free'' so to speak. It''s like the auto bailout and the execs flying to washington on private jets, give me a break. At work the other day this guy was talking about the variety of free drinks we got... i was like what the...? we just had mass layoffs and that''s a concern? Honestly peon or exec I said I''d lose the free sodas, forego the raise, bonuses, stock etc etc if it meant no one got laid off. Like we can''t last one year without it? Give me a break.

I''d rather my friend had a job then get a few percent raise. I''m sure I''ll survive without it.

Sorry for the rant, just my two cents!

 

[beebrisk]

Date: 2/5/2009 8:07:53 AM
Author: tradergirl
Confirmed. Pay Caps are a Joke. (Just mugging for the cameras)


http://clusterstock.alleyinsider.com/2009/2/confirmed-executive-pay-caps-are-a-joke

Here's the problem. LONG before the financial crisis, long before the socialization... er... nationalization...er...bailout happened, most of us working folk had already adopted a snearing, condescending attitude toward the Wall Street, auto industry and oil company fat cats. This innate dislike and distrust of a guy making a fortune because he's made his company and shareholders a fortune is nothing new.(As opposed to say, the much deserved salaries of folks like Will Smith and George Clooney who earn upwards of $20 million per picture).

But we are here faced with the government doling out as they see fit, our own hard-earned tax payments to ensure the survival of the biggest companies in the country. This NEVER should have happened in the first place. Never. But it did. And because of this, our administration now feels in a position to dictate salaries. Hey, after all, the "people" are now stock holders! Isn't it fair?! I never wanted this to happen. I don't want our government getting involved. I don't want our government bailing out corporations, and I don't want our government to be in a position where they feel they can dictate how a company should be managed or who gets paid what. Indeed, this is possibly one of the scariest financial scenarios we've seen in the history of this country.

Go ahead, scream that I'm a paranoid, close minded, sky-is-falling conservative. But what we have here is SOCIALISM trying hard to take hold of our free market. Granted, it all looks so very appealing while we are in midst of this mess and it does appear at the very least to be "the way out". But no doubt, if this trend continues, we are all going to be in some pretty sad shape down the road. I think everyone interested in our free market society should take interest in this. Forget what side of the political spectrum you are on right now because everyone's future is on the line.

And while on the subject, thank goodness it appears our Senate will not be blindly signing this joke of a stimulus package. We should all be hopeful they don't.

 

[elle_chris]

Date: 2/5/2009 11:04:30 AM
Author: beebrisk

Date: 2/5/2009 8:07:53 AM
Author: tradergirl
Confirmed. Pay Caps are a Joke. (Just mugging for the cameras)


http://clusterstock.alleyinsider.com/2009/2/confirmed-executive-pay-caps-are-a-joke

Here''s the problem. LONG before the financial crisis, long before the socialization... er... nationalization...er...bailout happened, most of us working folk had already adopted a snearing, condescending attitude toward the Wall Street, auto industry and oil company fat cats. This innate dislike and distrust of a guy making a fortune because he''s made his company and shareholders a fortune is nothing new.(As opposed to say, the much deserved salaries of folks like Will Smith and George Clooney who earn upwards of $20 million per picture).

But we are here faced with the government doling out as they see fit, our own hard-earned tax payments to ensure the survival of the biggest companies in the country. This NEVER should have happened in the first place. Never. But it did. And because of this, our administration now feels in a position to dictate salaries. Hey, after all, the ''people'' are now stock holders! Isn''t it fair?! I never wanted this to happen. I don''t want our government getting involved. I don''t want our government bailing out corporations, and I don''t want our government to be in a position where they feel they can dictate how a company should be managed or who gets paid what. Indeed, this is possibly one of the scariest financial scenarios we''ve seen in the history of this country.

Go ahead, scream that I''m a paranoid, close minded, sky-is-falling conservative. But what we have here is SOCIALISM trying hard to take hold of our free market. Granted, it all looks so very appealing while we are in midst of this mess and it does appear at the very least to be ''the way out''. But no doubt, if this trend continues, we are all going to be in some pretty sad shape down the road. I think everyone interested in our free market society should take interest in this. Forget what side of the political spectrum you are on right now because everyone''s future is on the line.

And while on the subject, thank goodness it appears our Senate will not be blindly signing this joke of a stimulus package. We should all be hopeful they don''t.

1000000% agreed.

 

[mrscushion]

Date: 2/5/2009 8:00:07 AM
Author: tradergirl
You don''t have to buy it. You''re not in the market for it.

I don''t know what that means.

 

[iluvcarats]

Date: 2/4/2009 12:56:06 AM
Author:thing2of2
I think this is a great idea, myself! link


''The Obama administration is expected to impose a cap of $500,000 for top executives at companies that receive large amounts of bailout money, according to people familiar with the plan.


Executives would also be prohibited from receiving any bonuses above their base pay, except for normal stock dividends. [...]


Crucial details remained unclear on Tuesday night, including whether the restrictions would apply to all companies that receive money under the so-called Troubled Asset Relief Program, or TARP, or whether they would apply only to the ''exceptional'' companies that were being rescued from collapse.''

Even Donald Trump agrees
cnn/trump

 

[JSM]

I feel dumb here - I honestly don''t understand why capping pay can be a bad thing. I have read the thread but I don''t get the opposition to salary limits. Layman''s terms will help.

(disclaimer: I am a SCIENTIST, and I have never taken a business or finance course in my life)


Okay, so I don''t necessarily agree with the bailout (the first one or the gigantic spending bill currently in congress). BUT, if a company is getting federal money, meaning tax money, to keep it from going under, how is it bad that they are capping pay for executives? If they were doing such a good job, why would they get bonuses and increased pay?

Won''t this mean that more of the bailout money is reinvested in the company? Perhaps, for example, it would mean more loans to the people, increasing revenue and stimulating the economy?

Again, I don''t really have a full grasp on financial issues, but why this could be bad is perplexing me.

 

[Porridge]

Wonderful idea.

 

[mrscushion]

A propos, this NYT article refers to an NBER paper studying pay on Wall Street compared to pay in the rest of the U.S. economy. Evidently, since 1909 Wall Street pay has generally been in line with other industries, except in two periods: 1920-1930 and 1990 to 2006, where Wall Street pay was 30-50% greater than other industries. If in the coming decades we see a large number of hedge fund managers making a billion a year again we need to watch our wallets!

 

[CDNinNYC]

Date: 2/5/2009 6:11:01 PM
Author: mscushion
A propos, this NYT article refers to an NBER paper studying pay on Wall Street compared to pay in the rest of the U.S. economy. Evidently, since 1909 Wall Street pay has generally been in line with other industries, except in two periods: 1920-1930 and 1990 to 2006, where Wall Street pay was 30-50% greater than other industries. If in the coming decades we see a large number of hedge fund managers making a billion a year again we need to watch our wallets!

Interesting. Thanks for posting this, mscushion.

 

[Diamond Confused]

What is he thinking??? I think that the execs should be watchd over carefully until this mess is cleared up, but the government has no business regulating earinings. This is, at least since the last time I checked, a capitalisic economy.

I undestand that this execs are overpaid, but has anyone stopped to consider that they also work 16 hour days, 7 days a week?

 

[strmrdr]

Date: 2/8/2009 1:30:11 AM
Author: Diamond Confused
What is he thinking??? I think that the execs should be watchd over carefully until this mess is cleared up, but the government has no business regulating earinings. This is, at least since the last time I checked, a capitalisic economy.


I undestand that this execs are overpaid, but has anyone stopped to consider that they also work 16 hour days, 7 days a week?

They don't get paid for working 16 hour days they get paid for results which they did not deliver therefore they should not be paid.
Should a cook in a restaurant who burns all the food and drives it into a deep deep hole get paid an outrageous salary year after year?

 

[beebrisk]

Date: 2/8/2009 1:58:15 AM
Author: strmrdr

Date: 2/8/2009 1:30:11 AM

Author: Diamond Confused

What is he thinking??? I think that the execs should be watchd over carefully until this mess is cleared up, but the government has no business regulating earinings. This is, at least since the last time I checked, a capitalisic economy.



I undestand that this execs are overpaid, but has anyone stopped to consider that they also work 16 hour days, 7 days a week?

They don''t get paid for working 16 hour days they get paid for results which they did not deliver therefore they should not be paid.

Should a cook in a restaurant who burns all the food and drives it into a deep deep hole get paid an outrageous salary year after year?

Actually, yes. He is entitled to whatever the owner, shareholder(s) and management decide to pay him.

 

[FrekeChild]

To answer your question Strm, that cook would be fired immediately because of the waste of product and incompetence. And he''d probably be making just over minimum wage (depending on what kind of restaurant-even fancy ones have fry cooks).

 

[miraclesrule]

I''d add to the restaurant hypothetical.

If the restaurant owner didn''t fire the cook for being incompetent, the restaurant would have no customers and would go out of business.

I suspect that most people who believe that any executive or worker is endlessly due compensation for "being there" instead of "providing long term value", either benefits from that incompetence. It could be their own, or someone elses. There is no other rational explanation that I can think of that would support otherwise.

Yet, being an open-minded person, I am all ears if somebody has a rational argument otherwise.

 

[Rank Amateur]

The financial industry has gotten fat and happy and is clearly out of touch. Most fund managers (I''ll say exactly half) can''t beat the market yet they truly believe they are worth the out-ofproportion $$ they get paid. The only ones really worth the money are the ones (probably a small handful) who got their clients OUT of the market before it crashed. THAT would be value. The boards of directors are supposed to represent the interests of the shareholders but they are caught up in the nevernever land as well. They are almost all cut from the same emporer''s clothes'' cloth and they don''t know it. They have shirked their feduciary duty and don''t know it. They should be embarassed, every one, but they are too obtuse.

All that said, Federal regulation of salaries is a nightmare in both philosophy and practicality. There must be a better way and it comes directly from the loud voices of the people.