NationStates Jolt Archive

Today, President Obama announced he will limit executive pay (up to $400K) for financial institutions taking federal taxpayer money.

I am delighted, after watching one CEO take a $20 million-plus "bonus" before leaving one failing company and going to another "takeover" company that simultaneously asked for more taxpayer dollars. I also saw a report of another CEO trying to "shelter" a multi-million dollar FLA estate/home from creditors by selling it to his wife for $100. Moreover, none of the financial institutions seem able to account for the money they already received.

The article below indicates that even republicans cannot justify this type of compensation which is unrelated to the health of the institutions at issue where taxpayer dollars are involved.

What do you think about this new TARP twist? Do you think executive compensation should be tied to performance and limited where taxpayers are paying to make these companies solvent? Are more stringent accounting procedures in order when taxpayer dollars are being used? Should executive pay be tied to performance and should these "bonuses" be returned where they are made with taxpayer money?

Obama administration to issue executive pay limits - 1 hour ago
WASHINGTON (AP) — The Obama administration plans to mandate new executive pay limits on Wednesday for government-assisted financial institutions in a new ...The Associated Press - 667 related articles »

Obama administration to issue executive pay limits - Breitbart - Associated Press - breaking - 1 hour ago

Obama administration to issue executive pay limits - The ... - iExecutiveOffice.com - 1 hour ago

Today, President Obama announced he will limit executive pay (up to $400K) for financial institutions taking federal taxpayer money.
Congrats to Obama, he's proved his competence yet again, and it hasn't even been a month.

It's nice. Not as good as having all the bastard's shot (regardless of personal involvement), but I guess you take what you can get in this economy.

Great idea. But I dont think it will accomplish much. Too many loopholes.

Great idea. But I dont think it will accomplish much. Too many loopholes.

It wouldn't have passed if there weren't.

Congrats to Obama, he's proved his competence yet again, and it hasn't even been a month.
I think that female Senator, whose name I can't recall (but who rhetorically asked whether these CEO's were "stupid" for taking bonuses in failing companies being bailed out) should be given the real credit for enunciating what most taxpayers were feeling, but I am grateful that Obama wants it made law and that republicans do too!

It wouldn't have passed if there weren't.
Hasn't passed yet, but with republican support (and there seems to be quite alot according to the article), it will pass.

Hasn't passed yet, but with republican support (and there seems to be quite alot according to the article), it will pass.
It will be interesting to see if that Republican support holds once it comes up for a vote. The RNC leadership have officially declared themselves the "Party of No."

It will be interesting to see if that Republican support holds once it comes up for a vote. The RNC leadership have officially declared themselves the "Party of No."
Boy, you said it, but I think that many of the republican "core" supporters are not wealthy wall streeters/bankers/real estate moguls and, like democrats and independents, they are appalled by the shenanigans of the top 1-3% receiving multi-million dollar bonuses for being at the helm of corporations who got tax breaks for years and now are essentially bankrupt, but for TARP money. Indeed, many of those institutions will still fail. It will be hard to justify no caps on compensation where taxpayer funds are preventing bankruptices and "toxic assets" are being shifted to taxpayers.

This kind of thing has always struck me as a populist move, imo. I've been highly impressed by Obama so far, even though I'm much further left as to be called a dirty commie.

This kind of thing has always struck me as a populist move, imo. I've been highly impressed by Obama so far, even though I'm much further left as to be called a dirty commie.
Hail to the populists and lefties! Beats being "right" and losing all our shirts!

Fired would be better.

However, it's a start. This country has rewarded failure at the top for far too long.

Fired would be better.

However, it's a start. This country has rewarded failure at the top for far too long.
Yes, fired would be appropriate but, for some reason, the stockholders of these companies did not vote to do that before the companies went bankrupt. Seems to me, that because these companies are essentially bankrupt absent financial aid with taxpayer money, all "contracts" of these CEOs and everyone else in these companies can be abrogated. I don't know why they don't do that too . . . . but then again, this is a good start. . . .

It will be interesting to see if that Republican support holds once it comes up for a vote. The RNC leadership have officially declared themselves the "Party of No."

They will if they know what's good for them. The leadership is still smarting from the backlash caused from the passage of TARP.

I don't doubt that any actions the politicians take are motivated solely by self interest, but the whole financial bailout thing absolutely crosses party lines at a grass roots level. I mean, how nuts is it that Dennis Kucinich and Ron Paul are on the same side?

So unless they want to make themselves even more unpopular, they'll support this.

I suspect Obama will have a bigger problem with some of his own party on this one.

Yes, I also join those who suggest some kind of mass purge of these clowns - possibly shooting.

Lessons need to be learned. And you do not learn very much on $400k a year. Not when you have screwed up this badly.

I think that female Senator, whose name I can't recall (but who rhetorically asked whether these CEO's were "stupid" for taking bonuses in failing companies being bailed out) should be given the real credit for enunciating what most taxpayers were feeling, but I am grateful that Obama wants it made law and that republicans do too!
Claire McCaskill

Though really, what has to be done at this time is a comprehensive nationalization plan. That it could happen is already out there, so it's pretty much inevitable at this point. As long as it is a risk, people will be reluctant to put money into these institutions for fear of it being nationalized out from under them, so it becomes a self fulfilling prophesy (because they need to raise money).

Sure, the government can say it's never going to go that far, but let's face it, the governments track record in this respect is less than stellar over the past twenty-four months.

It would be better for all just to pull the trigger and get it over with.

Claire McCaskill
You have mistitled yourself! Thank you! Yes, Senator Claire McCaskill gets Number 1 credit for enunciating the feelings of many, and President Obama gets Number 1 1/2 credit for following through and backing any such legislation.

Though really, what has to be done at this time is a comprehensive nationalization plan. That it could happen is already out there, so it's pretty much inevitable at this point. As long as it is a risk, people will be reluctant to put money into these institutions for fear of it being nationalized out from under them, so it becomes a self fulfilling prophesy (because they need to raise money).

Sure, the government can say it's never going to go that far, but let's face it, the governments track record in this respect is less than stellar over the past twenty-four months.

It would be better for all just to pull the trigger and get it over with.
You are probably correct--how low can the shares go? Now would be the time to nationalize while you and I are propping them up and trying to encourage continued investment in the USA from around the world.

They can go to zero.

Lot of price support at zero tho'.

that's exactly what failing banks need to hire less experienced executives willing to work for less.

that's exactly what failing banks need to hire less experienced executives willing to work for less.

Actually, I'd pay them as much as they wanted, but they'd have to take it in synthetic CDOs at par.

Actually, I'd pay them as much as they wanted, but they'd have to take it in synthetic CDOs at par.
Don't know what "synthetic CDOs" are--but it seems to me that not only the CEOs, but also the general staff will have to work for less.

The way things are going, we are walking into "The Greater Depression."

Prepare for yet more creative accounting practises in these companies,

Actually, I'd pay them as much as they wanted, but they'd have to take it in synthetic CDOs at par.

Credit Default...Opportunities?

It was Credit Default Swaps that toppled the house of cards.

I like the suggestion I heard recently. We should keep Gitmo open, and use it to incarcerate bank and S&L CEOs

Presumably, you have seen these videos posted below, which seem to reflect the majority, populist viewoint?

I think there may be riots in the streets if the divide between rich and middle class/poor gets any greater, or the government (local, state and federal) keeps chanting how they need to balance their budgets on multi-million dollar bonuses and salaries of the days of yore:

www.youtube.com/watch?v=yGfQk9XXm24 -

www.youtube.com/watch?v=KADr2KG5aso - 106k - Cached - Similar pages -

Congrats to Obama, he's proved his competence yet again, and it hasn't even been a month.

I thought you were a libertarian CM?

Anyway this is pretty ridiculous and they will find the loopholes so that companies may attract and retain the best executives instead of having to settle for third or fourth best and watch them flounder.

This kind of thing has always struck me as a populist move, imo. I've been highly impressed by Obama so far, even though I'm much further left as to be called a dirty commie.

Of course it is populist? You expected something else?

I thought you were a libertarian CM?

Anyway this is pretty ridiculous and they will find the loopholes so that companies may attract and retain the best executives instead of having to settle for third or fourth best and watch them flounder.
I don't think there are any "best executives"--who was staffing those bankrupt companies for the last 8 years or so?

I don't think that paying a person alot of money necessarily attracts the "best." One does not necessarily follow the other.

Perhaps you mean find "less greedy" executives willing to dig their companies out of bankruptcy (and create new company policies in tandem with government regulation and bailouts)?

I don't think there are any "best executives"--who was staffing those bankrupt companies for the last 8 years or so?

I don't think that paying a person alot of money necessarily attracts the "best." One does not necessarily follow the other.

Perhaps you mean find "less greedy" executives willing to dig their companies out of bankruptcy (and create new company policies in tandem with government regulation and bailouts)?

You never have been in management have you? Or one where you get an increase in pay based on performance.

You never have been in management have you? Or one where you get an increase in pay based on performance.

What's your point? Are you arguing that the people that they're trying to "attract" with these ludicrous bonuses aren't the same ones who have driven these companies into the ground? Where do you think companies get officer-type executives from? Randomly from outside the industry, or poached from other boards of companies in the same industry? To co-opt your snarky little response, you never have been in human resources have you? Or had to actually hire for a position.

You never have been in management have you? Or one where you get an increase in pay based on performance.

A lot of people here are unfamiliar with the idea of getting paid for being better at something.

Frankly, any bailout or stimulus package is a bad idea. It's only incurring debt for no good reason.

If we bail out companies and banks that were stupid, we're rewarding them for stupidity even if we cap their CEO's pay. The company can continue to be stupid, and we'll lose the money we put into them.

If we create make work projects as a stimulus, it's just throwing money into a hole - nothing that will result in long term job creation will take place.

What's your point? Are you arguing that the people that they're trying to "attract" with these ludicrous bonuses aren't the same ones who have driven these companies into the ground? Where do you think companies get officer-type executives from? Randomly from outside the industry, or poached from other boards of companies in the same industry? To co-opt your snarky little response, you never have been in human resources have you? Or had to actually hire for a position.

Actually I have had to hire for a position, have you? HR? No I haven't.

Yes they are trying to attract and retain the best people with these payments, so if all of a sudden they are told you can only pay them a certain amount of money then those which know they will be able to get more money for doing the same job (and a large proportion of CEO payments are performance based) will leave these companies and go to others. Those companies will then have to go for second best and pay what they are worth which may be less but then is the outcome the same? Probably not, those that are bringing in good results will not be able to be paid more and will be offered more money from other companies and they will leave thus now having to bring up lesser people into these positions.

A lot of people (.......) take place.

...which presumes that the money is given out sans conditions, and that there aren't severe - if not catastrophic consequences - from allowing such numbers of large financial institutions to collapse.

Actually I have had to hire for a position, have you? HR? No I haven't.

Yes they are trying to attract and retain the best people with these payments, so if all of a sudden they are told you can only pay them a certain amount of money then those which know they will be able to get more money for doing the same job (and a large proportion of CEO payments are performance based) will leave these companies and go to others. Those companies will then have to go for second best and pay what they are worth which may be less but then is the outcome the same? Probably not, those that are bringing in good results will not be able to be paid more and will be offered more money from other companies and they will leave thus now having to bring up lesser people into these positions.

Here's the scenario:

Company gets into major trouble, gets bailed out by the government.

Pay limits put into place.

Shareholders kick out current CEO, try to hire a new CEO.

With pay limits in place, what high talent person would want to work at a place where he's never going to make what he really could elsewhere?

Actually I have had to hire for a position, have you? HR? No I haven't.

Yes they are trying to attract and retain the best people with these payments, so if all of a sudden they are told you can only pay them a certain amount of money then those which know they will be able to get more money for doing the same job (and a large proportion of CEO payments are performance based) will leave these companies and go to others. Those companies will then have to go for second best and pay what they are worth which may be less but then is the outcome the same? Probably not, those that are bringing in good results will not be able to be paid more and will be offered more money from other companies and they will leave thus now having to bring up lesser people into these positions.

I'm unsure where you think banking execs can go to earn tons of money. Are they going to go outside the industry with the albatross of the banking industry failure hanging around their neck? Are they going to remain within an industry that now has pay limits for a vast majority of the available positions?

I'm unsure where you think banking execs can go to earn tons of money. Are they going to go outside the industry with the albatross of the banking industry failure hanging around their neck? Are they going to remain within an industry that now has pay limits for a vast majority of the available positions?

Isn't that my point.

Isn't that my point.

Isn't what your point? That their options are either unemployment or employment with a pay cap? I'm honestly struggling to figure out what the hell you're even saying in your posts; you can't very well determine your point for you when I have a hard time even reading your sentences.

Isn't what your point? That their options are either unemployment or employment with a pay cap? I'm honestly struggling to figure out what the hell you're even saying in your posts; you can't very well determine your point for you when I have a hard time even reading your sentences.

Ok I see, so you seem to think that CEO's will only work and will only be able to work in industries of which they have been CEO's before hand. Now are they going to remain in an industry where they have pay limits? No they are going to go to other industries without pay limits or they may stay in the industry but go work for companies outside of the US that don't have these government imposed limits.

Ok I see, so you seem to think that CEO's will only work and will only be able to work in industries of which they have been CEO's before hand. Now are they going to remain in an industry where they have pay limits? No they are going to go to other industries without pay limits or they may stay in the industry but go work for companies outside of the US that don't have these government imposed limits.

I think that executives in the banking industry that were in charge during the financial crisis are going to HAVE to remain in the banking industry, as no board for any other company in any other industry is going to hire them when there are plenty of other qualified candidates out there that haven't driven companies to the brink (and in some cases past the brink) of bankruptcy.

If you're the theoretical chairman of a board, trying to hire your new CFO, are you going to hire a candidate that just presided over the destruction of one of the now-collapsed banks?

Just who is it you think is clamoring to hire these disgraced banking executives?

It's nice. Not as good as having all the bastard's shot (regardless of personal involvement), but I guess you take what you can get in this economy.
if they had put execution into the first bailout we wouldnt have this problem today!

I think that executives in the banking industry that were in charge during the financial crisis are going to HAVE to remain in the banking industry, as no board for any other company in any other industry is going to hire them when there are plenty of other qualified candidates out there that haven't driven companies to the brink (and in some cases past the brink) of bankruptcy.

If you're the theoretical chairman of a board, trying to hire your new CFO, are you going to hire a candidate that just presided over the destruction of one of the now-collapsed banks?

Just who is it you think is clamoring to hire these disgraced banking executives?

Other companies, but then what about these banks which are trying to get back on their feet? Now are you saying they want to keep these same executives in charge? Or are you going to want to get the best people who can do the job properly? Now if they can't be paid more or have limits on how much they are paid why would they come over? Thus these banks are unable to attract and retain the best people for the job.

Other companies, but then what about these banks which are trying to get back on their feet? Now are you saying they want to keep these same executives in charge? Or are you going to want to get the best people who can do the job properly? Now if they can't be paid more or have limits on how much they are paid why would they come over? Thus these banks are unable to attract and retain the best people for the job.

So, now you've abandoned the argument that this pay cap is going to cause a brain drain in the banking industry as all that oh-so-valuable talent leaves? Now the argument is that $400,000 a year won't be enough to attract up-and-coming mid-level executives to the banking industry?

There are a couple hundred people in the US that can competently CEO a Billion dollar company. Successful CEOs are in incredibly high demand. Im sure we are all familiar with the laws of supply and demand. When you have low supply and high demand what do you think happens to salaries? If you artificially upset the balance of pay for work then only one or two things will happen. The CEO whos skills are in high demand will go to another company that pays better, or your CEO will not be drawn from this pool of people leading to increased chance of poorer less experienced leadership.

There are a couple hundred people in the US that can competently CEO a Billion dollar company. Successful CEOs are in incredibly high demand. Im sure we are all familiar with the laws of supply and demand. When you have low supply and high demand what do you think happens to salaries? If you artificially upset the balance of pay for work then only one or two things will happen. The CEO whos skills are in high demand will go to another company that pays better, or your CEO will not be drawn from this pool of people leading to increased chance of poorer less experienced leadership.

Except we have this gigantic real life case study that demonstrates that enormous pay did not, in any way, lead to the retention of highly-qualified staff. We have an economic philosophy played out in the real world, and the result was the exact opposite of what you're saying it ought to be. High pay did not attract skillful executives. So, we're to believe that, this time, the banks will use enormous compensation packages to actually hire qualified executives, instead of using it to hire people to run their companies off a cliff?

I'm unsure where you think banking execs can go to earn tons of money. Are they going to go outside the industry with the albatross of the banking industry failure hanging around their neck? Are they going to remain within an industry that now has pay limits for a vast majority of the available positions?

The problem is the pool of American that have the ability to run multi billion dollar companies with any skill whatsoever number in the hundreds, and there are only maybe a handful that do the very best, the Jobbs Gates Buffets. Even Buffet just took a huge bath in his latest GE investment, as no CEO even the very best are immune to huge losses.

So unless you want to risk your multi billion dollar company with someone who doesnt have the same abilities as these few hundred Americans you pay the big salaries. Big salaries does not mean risk free CEOs , your simply hedging your bets with one instead of someone who comes in whos already over their heads.

There are a couple hundred people in the US that can competently CEO a Billion dollar company.

Unfortunately it would appear that, despite the huge compensation, most of the companies being bailed out didn't find any.

Except we have this gigantic real life case study that demonstrates that enormous pay did not, in any way, lead to the retention of highly-qualified staff. We have an economic philosophy played out in the real world, and the result was the exact opposite of what you're saying it ought to be. High pay did not attract skillful executives. So, we're to believe that, this time, the banks will use enormous compensation packages to actually hire qualified executives, instead of using it to hire people to run their companies off a cliff?

See my post just above about Warren Buffet recently losing billions on a bad GE investment. Even the most brilliant CEOs on the planet are not immune to bad performance. The stock prices in the best run companies in the whole country are down 40% +

The problem is the pool of American that have the ability to run multi billion dollar companies with any skill whatsoever number in the hundreds, and there are only maybe a handful that do the very best, the Jobbs Gates Buffets. Even Buffet just took a huge bath in his latest GE investment, as no CEO even the very best are immune to huge losses.

So unless you want to risk your multi billion dollar company with someone who doesnt have the same abilities as these few hundred Americans you pay the big salaries. Big salaries does not mean risk free CEOs , your simply hedging your bets with one instead of someone who comes in whos already over their heads.

They're not hedging their bets any more, though. We are. You, me, every taxpayer in this country is now the one hedging the bets of the people who have demonstrated they either don't know bad talent or can't find good talent. Why should we trust that, this time, the banks are going to be able to find that talent with this outlandish sum of money we're supposed to just let them spend, when they've demonstrated quite clearly in the past that they're completely incapable of judging talent.

Tell you what. Give me $80,000. I promise that I'll use that money to find the right candidate for this Technical Writer job I've been trying to fill. Nevermind the fact that we've had to fire the last 3 guys I've hired for the position, or the fact that the last guy violated a copyright and cost us $1.2 million in a suit. I promise this time will be different.

(for the record, that scenario isn't true, I don't have an open technical writer position)

Unfortunately it would appear that, despite the huge compensation, most of the companies being bailed out didn't find any.

You'll notice that most companies didn't go under, either.

Here, we'll pay you (a person with no CEO track record) 500,000 a year to run one of these companies.

Want to place bets on how you'll do this year?

They're not hedging their bets any more, though. We are. You, me, every taxpayer in this country is now the one hedging the bets of the people who have demonstrated they either don't know bad talent or can't find good talent. Why should we trust that, this time, the banks are going to be able to find that talent with this outlandish sum of money we're supposed to just let them spend, when they've demonstrated quite clearly in the past that they're completely incapable of judging talent.

This simply isnt true, some of these banks have been in business for 120 years choosing leadership and successfully paying salaries to executives for generations.

Tell you what. Give me $80,000. I promise that I'll use that money to find the right candidate for this Technical Writer job I've been trying to fill. Nevermind the fact that we've had to fire the last 3 guys I've hired for the position, or the fact that the last guy violated a copyright and cost us $1.2 million in a suit. I promise this time will be different.

The difference is, there are a million people that can do your job, so your easily replaced. Getting a new CEO is a long complicated and expensive process with a very limited applicant pool.

So, now you've abandoned the argument that this pay cap is going to cause a brain drain in the banking industry as all that oh-so-valuable talent leaves? Now the argument is that $400,000 a year won't be enough to attract up-and-coming mid-level executives to the banking industry?

I have not abandoned it at all,as for $400,000 a year that better be a figure you have pulled out of your arse, if that s the cap that is being proposed than god help the US companies. Now it isn't enough not in the slightest and if they know they can leave the states and get well over a few million a year they will do so.

Except we have this gigantic real life case study that demonstrates that enormous pay did not, in any way, lead to the retention of highly-qualified staff. We have an economic philosophy played out in the real world, and the result was the exact opposite of what you're saying it ought to be. High pay did not attract skillful executives. So, we're to believe that, this time, the banks will use enormous compensation packages to actually hire qualified executives, instead of using it to hire people to run their companies off a cliff?

Despite these banks making a lot of money for the company and increasing the value of their company by a considerable extent? Nah not qualified at all, but then this whole crisis isn't entirely the fault of the banks anyway.

This simply isnt true, some of these banks have been in business for 120 years choosing leadership and successfully paying salaries to executives for generations.

Of course it is true. The ability of those hiring executives at Lehman Brothers in 1942 has literally no bearing on the ability of those hiring executives at Lehman Brothers today (or 5 years ago, whatever). Just because they were capable in the past does not make them so today, and we have a mountain of evidence to suggest that they suck at identifying talent today.


The difference is, there are a million people that can do your job, so your easily replaced. Getting a new CEO is a long complicated and expensive process with a very limited applicant pool.

No, the difference is that no one in their right mind would allow me to spend their money to hire someone if I actually had a track record like that. If I were responsible for hiring employees that ruined my company the way that these executives ruined some of these banks, there's not a chance in hell that my company would allow me to fill a position again. I'd likely lose my job.

I have not abandoned it at all,as for $400,000 a year that better be a figure you have pulled out of your arse, if that s the cap that is being proposed than god help the US companies. Now it isn't enough not in the slightest and if they know they can leave the states and get well over a few million a year they will do so.

$400,000 was the figure being thrown about because it's the salary of the President of the United States. The figure finally settled on is $500,000. And again, I'm struggling to comprehend who you think is lining up to hire these disgraced banking executives, and who you think is lining up to hire unproven mid-level executives at several million dollars a year. It's as if you have no idea whatsoever how the world works.

Here, we'll pay you (a person with no CEO track record) 500,000 a year to run one of these companies.

$500,000 a year? Well I would take it but no upper level executive in their right mind would partly because thy would already be paid this or even more.

And you know what if they did an excellent job then the company would want to increase their pay if it is set at say this limit then the company can't do this and other companies that are allowed to spend more will be offering them more money. I wonder where they might go?

$500,000 a year? Well I would take it but no upper level executive in their right mind would partly because thy would already be paid this or even more.

And you know what if they did an excellent job then the company would want to increase their pay if it is set at say this limit then the company can't do this and other companies that are allowed to spend more will be offering them more money. I wonder where they might go?

You'll find that I already agree with you.

They'll go to Dubai and work for a private equity firm.

$400,000 was the figure being thrown about because it's the salary of the President of the United States. The figure finally settled on is $500,000. And again, I'm struggling to comprehend who you think is lining up to hire these disgraced banking executives, and who you think is lining up to hire unproven mid-level executives at several million dollars a year. It's as if you have no idea whatsoever how the world works.

$500,000 they must be having a laugh. Or is that just the base pay and doesn't include bonuses?

Who wants to hire these people? Other banks and other companies while some people may have some poor times they have in the past been hired by other companies in some sort of capacity even if it is the board of directors. But I suppose you must think with your infinite wisdom on how the world works that once these executives have one failure they are never hired again.

And you also mentioned unemployment or lower salary but still working. Considering that most of these would have clauses in their contract that if they leave they get paid a certain amount of money why wouldn't they? Screw all of a sudden seeing your pay drop to at best 25% of what it was orginally for the same job. I am sure even you would want to quit.

You'll find that I already agree with you.

They'll go to Dubai and work for a private equity firm.

I know you know what would happen, I am wondering if Sdaeriji will understand what happens when people are offered more for a similar job when their current employer can't offer them the same amount or even higher to try and retain them.

$500,000 they must be having a laugh. Or is that just the base pay and doesn't include bonuses?

Who wants to hire these people? Other banks and other companies while some people may have some poor times they have in the past been hired by other companies in some sort of capacity even if it is the board of directors. But I suppose you must think with your infinite wisdom on how the world works that once these executives have one failure they are never hired again.

And you also mentioned unemployment or lower salary but still working. Considering that most of these would have clauses in their contract that if they leave they get paid a certain amount of money why wouldn't they? Screw all of a sudden seeing your pay drop to at best 25% of what it was orginally for the same job. I am sure even you would want to quit.

The $500,000 is a hard cap on cash compensation. If any one of the banks that accepts federal funds wants to compensate their executives further, it has to be done in stock options that cannot be liquidated until the bank has settled its debt with the government.

My infinite wisdom says that, in a recession, when there are fewer jobs to be had, that the more talented get the fewer jobs. My infinite wisdom says that a person who literally forced their company to close their doors would be considered "less talented", and would therefore have fewer job opportunities. My infinite widsom suggests that a company looking to hire an executive, and that has multiple potential candidates, is going to shy away from the guy who bankrupted his last company. My infinite wisdom is basic logic.

The $500,000 is a hard cap on cash compensation. If any one of the banks that accepts federal funds wants to compensate their executives further, it has to be done in stock options that cannot be liquidated until the bank has settled its debt with the government.

My infinite wisdom says that, in a recession, when there are fewer jobs to be had, that the more talented get the fewer jobs. My infinite wisdom says that a person who literally forced their company to close their doors would be considered "less talented", and would therefore have fewer job opportunities. My infinite widsom suggests that a company looking to hire an executive, and that has multiple potential candidates, is going to shy away from the guy who bankrupted his last company. My infinite wisdom is basic logic.

My infinite wisdom says that if a company does so badly it needs a bailout, the shareholders are going to replace the CEO.

So company starts interviewing applicants. Of course, since there's a pay cap, the real talent isn't going to bother applying.

Your company with its caps is never going to get the talent it needs to dig out of the problem.

The real talent will go to companies that haven't taken any bailout money.

I know you know what would happen, I am wondering if Sdaeriji will understand what happens when people are offered more for a similar job when their current employer can't offer them the same amount or even higher to try and retain them.

There's nothing I love more than when people talk about other posters like they're not right there in the thread. It's really the ultimate in condescending bullshit.

I wonder if you understand that the job opportunities for an executive who caused the complete destruction of his company are limited. He may be able to take his multi-million dollar bonus and retire, but there aren't going to be many companies looking for his services

The $500,000 is a hard cap on cash compensation. If any one of the banks that accepts federal funds wants to compensate their executives further, it has to be done in stock options that cannot be liquidated until the bank has settled its debt with the government.

Oh well that makes it so much more attractive. I see the best beating a path to these companies right now. :rolleyes:

My infinite wisdom says that, in a recession, when there are fewer jobs to be had, that the more talented get the fewer jobs. My infinite wisdom says that a person who literally forced their company to close their doors would be considered "less talented", and would therefore have fewer job opportunities. My infinite widsom suggests that a company looking to hire an executive, and that has multiple potential candidates, is going to shy away from the guy who bankrupted his last company. My infinite wisdom is basic logic.

Fewer job opportunities maybe but still would be looking for a job that paid well, but then again if this cap is put in place the more talented ones aren't going to go to these companies when they know they can get a much better remuneration package else where, so now the multiple potential candidates has fallen already. As these people whom you have deemed "less talented" because they alone (another mistake you have made) ran the company into the ground may have to be hired by these companies or they could (and many have done this in the past) go find another job working for another company and paid more than a meager $500,000 a year. Now where are they going to get the people to run these companies, well the incompetents who have decided that they will stick around and the less experienced and perhaps less talented people will be hired. Now some of these may have a lot of good talent and you know what (and your basic logic will agree here) that aren't going to stick around with a company that is paying them perhaps only a third (not counting bonuses) of what they can get else where.

My infinite wisdom says that if a company does so badly it needs a bailout, the shareholders are going to replace the CEO.

So company starts interviewing applicants. Of course, since there's a pay cap, the real talent isn't going to bother applying.

Your company with its caps is never going to get the talent it needs to dig out of the problem.

The real talent will go to companies that haven't taken any bailout money.

Well, let's see.

Bank of America accepted $45 billion. Ken Lewis is still Chairman, President, and CEO.

Citigroup accepted $50 billion. Gary Crittendon is still CFO, and Vikram Pandit is still CEO.

JP Morgan Chase accepted $25 billion. James Dimon is still Chairman, President, and CEO.

Wells Fargo accepted $25 billion. Dick Kovacevich is still Chairman, and John Stumpf is still CEO.

Goldman Sachs accepted $10 billion. Lloyd Blankfein is still Chairman and CEO.

Morgan Stanley accepted $10 billion. John Mack is still Chairman and CEO.

Seems like your infinite wisdom sucks.

Well, let's see.

Bank of America accepted $45 billion. Ken Lewis is still Chairman, President, and CEO.

Citigroup accepted $50 billion. Gary Crittendon is still CFO, and Vikram Pandit is still CEO.

JP Morgan Chase accepted $25 billion. James Dimon is still Chairman, President, and CEO.

Wells Fargo accepted $25 billion. Dick Kovacevich is still Chairman, and John Stumpf is still CEO.

Goldman Sachs accepted $10 billion. Lloyd Blankfein is still Chairman and CEO.

Morgan Stanley accepted $10 billion. John Mack is still Chairman and CEO.

Seems like your infinite wisdom sucks.

And so must yours after all you said they wouldn't want to hire the same guy who drove the company into the ground. And how much are these people who have been retained being paid?

My infinite wisdom says that, in a recession, when there are fewer jobs to be had, that the more talented get the fewer jobs.

Your infinite wisdom is already wrong on your first premise. The number of mulitbillion dollar business in need of CEOs has not dramatically decreased. The pool of skilled CEOs is clearly even smaller then the small group of a few hundred that we thought we had in the first place. This demand will increase the price of capable CEOs not decrease it. What does your infinite wisdom say about that?

And so must yours after all you said they wouldn't want to hire the same guy who drove the company into the ground. And how much are these people who have been retained being paid?

I said that another company outside the industry isn't going to want to hire a guy who ran one of these banks into the ground, so they would have to stay within the banking industry. Nothing in what I said has been disproved by showing a bunch of executives from failing banks getting to keep their jobs. Your attempt to show me up has failed.

And I'm not going to do your research for you. If you're interested in finding out how much each of those men earns, look it up. It's irrelevant to my point.

Your infinite wisdom is already wrong on your first premise. The number of mulitbillion dollar business in need of CEOs has not dramatically decreased. The pool of skilled CEOs is clearly even smaller then the small group of a few hundred that we thought we had in the first place. This demand will increase the price of capable CEOs not decrease it. What does your infinite wisdom say about that?

It says that the CEOs of these failed banks have already proven they are not capable. I'm still struggling to comprehend this premise that, even though they have been directly responsible for their company going out of business, their services will still be in high demand.

It says that the CEOs of these failed banks have already proven they are not capable. I'm still struggling to comprehend this premise that, even though they have been directly responsible for their company going out of business, their services will still be in high demand.

Well the thing is that they aren't directly responsible for the company going out of business, they are partly responsible but that is neither here nor there. However IF wasn't talking about these people anyway he was talking about the demand for skilled executives.

The thing is Sdaeriji you are under this impression that when one of these CEO's or other high official in the company is in charge when the company begins to go down then they won't be hired who you say will be hiring these people. Well for an example (because I have mentioned that many do get hired again by different companies before) is the story of Barbara Ward she was formerly a director of Allco and left one day before it went belly up, now she has been appointed by Qantas to be sit on the board of directors. Similarly Margaret Jackson who was Chairman of Qantas and was forced to resign over her poor handling of a takeover bid was quick to be snapped up by Flexigroup.

It says that the CEOs of these failed banks have already proven they are not capable. I'm still struggling to comprehend this premise that, even though they have been directly responsible for their company going out of business, their services will still be in high demand.

Steve Jobbs one of the more universally accepted best executives in the country has seen Apple stock drop 66%. Should he be fired for driving the company into the ground and would he be unemployed looking for a $500,000 a year job to get by? Yea right.

Why should a taxpayer owned company be excluded from accessing Steve Jobbs talents if the opportunity presented itself?

It says that the CEOs of these failed banks have already proven they are not capable. I'm still struggling to comprehend this premise that, even though they have been directly responsible for their company going out of business, their services will still be in high demand.
Just an observation based on reading the thread, but this seems to me to be a battle between ideology and reality.

The ideology of how business/markets should work says "Higher pay = better talent."

The reality of what we have seen actually happen says "Higher pay is not an attractor at all. The US executive pool is a closed club based on personal networking that keeps CEOs, CFOs, COOs, etc, in their jobs regardless of performance and with their compensation packages negotiated independently of performance as well (evidence: the fact that poor performance does not lead to reduction of compensation)."

Idealogy counters with "But higher pay = better talent. It says so right here in the How To Run a Free Market Handbook. If we pay them less, we'll lose their talent."

Reality: "Their talent sucks."

Ideology: "No, it doesn't, because their pay is high. See, it's right here: higher pay = better talent."

Reality: "They ran their companies into the ground."

Ideology: "'Tis but a scratch."

And so on. I really don't see this ending in any other way than Reality carrying on with finding a way to fix the problem while Ideology is left behind with no arms and legs, screaming about how it will bite our bloody legs off if we'd just come back to keep fighting with it.

You never have been in management have you? Or one where you get an increase in pay based on performance.
The reality is, that the incredibly high-pay given for performance of companies in the last almost 10 years has not been linked to "better performance" of those companies. In fact, those companies are bankrupt, "but for" the taxpayers bailing them out.

Just because a job pays alot of money, does not mean that the "best" candidates are applying for it. In his latest testimony before the senate, Alan Greenspan stated that while the Bush plan of greater deregulation was being implemented, he assumed US companies would have a self-protective instinct and it never occurred to him that they would take risks and do things that would be self-damaging simply because deregulation was in effect. (Or words to that effect)

He acknowledged that his assumption was wrong because, in the end, greed drove these companies (and their CEOs) to take higher and higher risks while ignoring the realities of what they were doing and the products they were securitizing, causing their effective bankruptcies.

Now, Alan Greenspan worked for the government not making millions every year in bonuses and salaries. He enabled the businesses to have every bit of deregulation they wanted in the last 8-10 years. He now works for a hedge fund company. The CEOs of the companies he referred to in his testimony walked away with millions in salaries and bonuses (see prior posts)

Do you think Alan Greenspan is the best "talent" and should be highly compensated considering his background in government instead of business? How much do you think he should be paid considering this testimony and his performance over the past 8 years? He is now highly compensated, but look at the state of the USA and the world. Do you think that the CEOs of the companies he was referring to should be highly compensated because they are "talented"??? According to Greenspan, they failed to keep their companies solvent and acted against the best interests of their companies, notwithstanding deregulation. As you will also see from prior posts, all these CEOs have done, while taking their multi-million dollar bonuses from a failed company, is jump to another failing company or takeover company.

A lot of people here are unfamiliar with the idea of getting paid for being better at something.

Frankly, any bailout or stimulus package is a bad idea. It's only incurring debt for no good reason.

If we bail out companies and banks that were stupid, we're rewarding them for stupidity even if we cap their CEO's pay. The company can continue to be stupid, and we'll lose the money we put into them.

If we create make work projects as a stimulus, it's just throwing money into a hole - nothing that will result in long term job creation will take place.
Unfortunately, you failed to convince George Bush and the right-wing republicans of this viewpoint before he declared, about two months before his 8-year term ended, that the banking and financial industries needed a bailout with "no strings attached," and only that guy who looks like Colonel Clink should oversee that infusion of taxpayer money.

What is more unfortunate, is that you failed to convince George Bush and the same right-wing republicans over those same 8 years that the "trickle down" theory was a fallacy and did not work, enabling people to purchase real estate (commercial or otherwise) with little or no money down, no guarantees or security and loaning against future "equity" while securitizing those loans and selling them to the world was perhaps not the best strategy, and perhaps it was also unwise to remove the previous regulations that prevented banks from involving themselves in the securities industries.

Actually I have had to hire for a position, have you? HR? No I haven't.

Yes they are trying to attract and retain the best people with these payments, so if all of a sudden they are told you can only pay them a certain amount of money then those which know they will be able to get more money for doing the same job (and a large proportion of CEO payments are performance based) will leave these companies and go to others. Those companies will then have to go for second best and pay what they are worth which may be less but then is the outcome the same? Probably not, those that are bringing in good results will not be able to be paid more and will be offered more money from other companies and they will leave thus now having to bring up lesser people into these positions.
You know what is really working? The failing companies that took taxpayer money don't want the executive compensation caps and other regulations that will result, so at least one company said it is going to pay back the baiout money as fast as it can to release itself from that situation. I think it is Goldman Sachs.

Therefore, the incentive for them to improve their books and return to their prior bonus and unlimited pay situation is the executive pay limits and other regulations that resulted from the fact they are being bailed out (instead of being permitted to go bankrupt like anyone else).

Finally a pay limit. Loopholes in it, but its a start.

You'll notice that most companies didn't go under, either.

Here, we'll pay you (a person with no CEO track record) 500,000 a year to run one of these companies.

Want to place bets on how you'll do this year?
Where have you been? These companies were about to go under (ie. bankruptcy) until Bush blew the whistle on himself and begged for the congress/senate and taxpayers to bail out these companies! They did not go belly up yet because taxpyer funds are now propping them up, but some will.

People seem to be making a rather worrying assumption that because a bank is struggling, every executive that works for it is incompetent. Rather than the possibility that the good managers who are in charge of profitable divisions of the struggling banks are about to be cherry picked by the banks who aren't in trouble.

People seem to be making a rather worrying assumption that because a bank is struggling, every executive that works for it is incompetent. Rather than the possibility that the good managers who are in charge of profitable divisions of the struggling banks are about to be cherry picked by the banks who aren't in trouble.
"Managers" of bank divisions have little to do with setting policy for what products are to be marketed. In any event, even if there are good managers with profitable divisions, if the overall health of the bank is bankruptcy/bailout mode, it matters little what the manager of a particular division is doing.

Steve Jobbs one of the more universally accepted best executives in the country has seen Apple stock drop 66%. Should he be fired for driving the company into the ground and would he be unemployed looking for a $500,000 a year job to get by? Yea right.

If only I had the option of "getting by" on half a million dollars cold cash every single year.

Today, President Obama announced he will limit executive pay (up to $400K) for financial institutions taking federal taxpayer money.

OMG COMMIE!

:D

I think I'll get Obama that famous postcard. I'll scan it and post it here so to show you I'm not making it up.

Today, President Obama announced he will limit executive pay (up to $400K) for financial institutions taking federal taxpayer money.

I am delighted, after watching one CEO take a $20 million-plus "bonus" before leaving one failing company and going to another "takeover" company that simultaneously asked for more taxpayer dollars. I also saw a report of another CEO trying to "shelter" a multi-million dollar FLA estate/home from creditors by selling it to his wife for $100. Moreover, none of the financial institutions seem able to account for the money they already received.

The article below indicates that even republicans cannot justify this type of compensation which is unrelated to the health of the institutions at issue where taxpayer dollars are involved.

What do you think about this new TARP twist? Do you think executive compensation should be tied to performance and limited where taxpayers are paying to make these companies solvent? Are more stringent accounting procedures in order when taxpayer dollars are being used? Should executive pay be tied to performance and should these "bonuses" be returned where they are made with taxpayer money?

Obama administration to issue executive pay limits - 1 hour ago
WASHINGTON (AP) — The Obama administration plans to mandate new executive pay limits on Wednesday for government-assisted financial institutions in a new ...The Associated Press - 667 related articles »

Obama administration to issue executive pay limits - Breitbart - Associated Press - breaking - 1 hour ago

Obama administration to issue executive pay limits - The ... - iExecutiveOffice.com - 1 hour ago
We will see an exodus of executive talent from these companies and they will not be able to attract the quality that they need to recover. Thus accepting TARP funds will be a recipe for failure.

So, now you've abandoned the argument that this pay cap is going to cause a brain drain in the banking industry as all that oh-so-valuable talent leaves? Now the argument is that $400,000 a year won't be enough to attract up-and-coming mid-level executives to the banking industry?
Yes.

Just like it wouldn't be enough to sign big name athletes or actors. The high quality executives are stars in their field and have the power to demand high salaries.

If only I had the option of "getting by" on half a million dollars cold cash every single year.

Unfortunately for you, you dont have the talent that Steve Jobbs has.

Just like it wouldn't be enough to sign big name athletes or actors. The high quality executives are stars in their field and have the power to demand high salaries.

Well then, let the companies collapse then. No bail money for anyone. Weren't you one of the ones screaming about the evils of welfare? Why should corporate welfare be any different? If they can't dig themselves out of the hole they've dug themselves, let them die.

We will see an exodus of executive talent from these companies and they will not be able to attract the quality that they need to recover. Thus accepting TARP funds will be a recipe for failure.

Yes.

Just like it wouldn't be enough to sign big name athletes or actors. The high quality executives are stars in their field and have the power to demand high salaries.
*looks at past 10-20 years of policy and management decisions in the financial industry and other corporate business areas* *looks at current state of the economy* *considers Myrm's statements* *decides*

Good. Time to dump the crooked, stupid motherfuckers and institute a new model for running these kinds of businesses, making new kinds of compensation deals with new kinds of people.

Well then, let the companies collapse then. No bail money for anyone. Weren't you one of the ones screaming about the evils of welfare? Why should corporate welfare be any different? If they can't dig themselves out of the hole they've dug themselves, let them die.
Sounds like a good free market capitalist plan to me.

Well then, let the companies collapse then. No bail money for anyone. Weren't you one of the ones screaming about the evils of welfare? Why should corporate welfare be any different? If they can't dig themselves out of the hole they've dug themselves, let them die.

I've opposed these payments since the beginning. No change there...

Well then, let the companies collapse then. No bail money for anyone. Weren't you one of the ones screaming about the evils of welfare? Why should corporate welfare be any different? If they can't dig themselves out of the hole they've dug themselves, let them die.

While ordinarily i would agree with you, the bank industry is a special case. If the banking system goes down it takes down everyone else with it, from the small store owner that needs short term bridge loans for inventory to States like California trying to meet its debt load to the regular American citizen who needs a home.

I've opposed these payments since the beginning. No change there...
How about this:

If a company wants to change its business model, totally overhaul its executive structure, and essentially wipe the slate clean and start over from the top down, it can accept TARP funds with any and all restrictions that come with the money.

But if a company wants to just carry on as it has been doing, it can forego TARP funds and manage all by itself as best it can.

And we'll see who survives.

How about this:

If a company wants to change its business model, totally overhaul its executive structure, and essentially wipe the slate clean and start over from the top down, it can accept TARP funds with any and all restrictions that come with the money.

But if a company wants to just carry on as it has been doing, it can forego TARP funds and manage all by itself as best it can.



I think you are missing a fundamental truth here. Good executives can still make bad decisions. I will make this example for the 10th time now, the universally acknowledged best CEOs in the country are running companys that have stock prices in many cases 40 to 60% lower then thier highs. Does this make them bad CEOs? Would you hire Warren Buffet to run your company despite the fact he just blew Billions on his latest GE deal? Would you hire Steve Jobbs despite the fact that the stock used to be $250 a share and a few weeks ago it was at $71? Failure of a company does not automatically equal poor leadership.

Starting over with a fresh board of directors as you suggest is a guaranteed way of flushing public money straight down the sewer. Anyone can explain to you the business inefficiencies of reinventing the wheel when all you need to do is change a tire.

I think you are missing a fundamental truth here. Good executives can still make bad decisions. I will make this example for the 10th time now, the universally acknowledged best CEOs in the country are running companys that have stock prices in many cases 40 to 60% lower then thier highs. Does this make them bad CEOs? Would you hire Warren Buffet to run your company despite the fact he just blew Billions on his latest GE deal? Would you hire Steve Jobbs despite the fact that the stock used to be $250 a share and a few weeks ago it was at $71? Failure of a company does not automatically equal poor leadership.

Starting over with a fresh board of directors as you suggest is a guaranteed way of flushing public money straight down the sewer. Anyone can explain to you the business inefficiencies of reinventing the wheel when all you need to do is change a tire.
I noticed your Warren Buffet example and I ignored it as not relevant, because Warren Buffet did not spend 10-20 years making nothing but bad decisions and getting paid huge amounts of money for it. He did not spend his career jumping from one failed company to another. He is not actually an example of a bad executive.

100% perfection is neither possible nor required. However, it seems that 100% failure is possible, but it is most certainly no longer desirable.

Also, I am not impressed by your predictions of the future, which seem to be based on nothing but your belief that the way we've been doing things is the right way. Nor am I convinced that the only thing needed is a change of tire. Actually, I actively disagree with that. I think we need a whole new fucking car.

This is not the first time this issue has reminded me of the movie "Reanimator" and the mad scientist Herbert West repeating the same disastrously failed experiment over and over and over again, populating the landscape with monsters, while constantly complaining the corpses just aren't fresh enough for his perfect idea to work on them. Reality check, Herbert: The problem is not stale corpses.

Yes.

Just like it wouldn't be enough to sign big name athletes or actors. The high quality executives are stars in their field and have the power to demand high salaries.

Improper analogy. The reason high quality atheletes and actors get paid well is precisely because their talent/name recognition makes it profitable for the film studies/sports teams to pay them that. Tom Brady is a damned good quarterback. Being a damned good quarterback helps him win games. Winning games sells ticket. Sold tickets make money. The Brady earnes his salary.

Since, however, we're talking about companies that need government welfare to stay afloat, the analogy fails. If Tom Brady didn't put butts in seats (IE, make the business profitable) he wouldn't command that salary.

I think you are missing a fundamental truth here. Good executives can still make bad decisions. I will make this example for the 10th time now, the universally acknowledged best CEOs in the country are running companys that have stock prices in many cases 40 to 60% lower then thier highs. Does this make them bad CEOs? Would you hire Warren Buffet to run your company despite the fact he just blew Billions on his latest GE deal? Would you hire Steve Jobbs despite the fact that the stock used to be $250 a share and a few weeks ago it was at $71? Failure of a company does not automatically equal poor leadership.

And Tom Brady, to use my previous example, occassionally throws a pick. Doesn't make him a bad QB. It's about totality.

Yes.

Just like it wouldn't be enough to sign big name athletes or actors. The high quality executives are stars in their field and have the power to demand high salaries.

Failed analogy. Big name athletes and actors get paid high salaries because they have a proven ability to earn a lot of money for their employers. Unproven athletes and actors do not start out with huge salaries; they have to earn them by showing results. And formerly big name athletes and actors who have several bad years/big flops do not continue to get huge salaries once it's proven that their talent is no longer sufficient to earn a lot of money for their employers.

I think you are missing a fundamental truth here. Good executives can still make bad decisions. I will make this example for the 10th time now, the universally acknowledged best CEOs in the country are running companys that have stock prices in many cases 40 to 60% lower then thier highs. Does this make them bad CEOs? Would you hire Warren Buffet to run your company despite the fact he just blew Billions on his latest GE deal? Would you hire Steve Jobbs despite the fact that the stock used to be $250 a share and a few weeks ago it was at $71? Failure of a company does not automatically equal poor leadership.

Starting over with a fresh board of directors as you suggest is a guaranteed way of flushing public money straight down the sewer. Anyone can explain to you the business inefficiencies of reinventing the wheel when all you need to do is change a tire.

Needing a government bailout just to stay in business indicates more of a problem than a flat tire.

If Tom Brady didn't put butts in seats (IE, make the business profitable) he wouldn't command that salary.

Unless we're talking about Chicago teams, who pay obsecene amounts of money for crap players:p

"Managers" of bank divisions have little to do with setting policy for what products are to be marketed. In any event, even if there are good managers with profitable divisions, if the overall health of the bank is bankruptcy/bailout mode, it matters little what the manager of a particular division is doing.

It matters a huge deal. If you encourage the successful managers of profitable sectors to move on to other businesses you are left with only the bad parts. The purpose of the bailouts were to ensure the survival of the banks not hasten their decline.

Improper analogy. The reason high quality atheletes and actors get paid well is precisely because their talent/name recognition makes it profitable for the film studies/sports teams to pay them that. Tom Brady is a damned good quarterback. Being a damned good quarterback helps him win games. Winning games sells ticket. Sold tickets make money. The Brady earnes his salary.

Since, however, we're talking about companies that need government welfare to stay afloat, the analogy fails. If Tom Brady didn't put butts in seats (IE, make the business profitable) he wouldn't command that salary.
Nah, the analogy is a good one. You made the point correctly. At the most basic level, actors and athletes command high salaries because they do put money in someone's pocket. High quality executives do the same thing. Except that sometimes, they put the brakes on a decline in profitability, rather than cause an increase. Either way, it's something that a stockholder values.

Since we're talking about companies that have accepted public money to avoid bankruptcy, the analogy is even more appropriate. They absolutely need to hire one of the big guns of finance. And if one of these guys can be paid ten or twenty times more at a non-restricted company, I have no doubt that they will head that way.

And that brings up a question that is entirely unrelated to the analogy thing... What will companies do to get around the salary cap? Can they give RSUs as incentives? A villa in Malaga? Some other sort of deferred compensation? Because they will find a way.

Nah, the analogy is a good one. You made the point correctly. At the most basic level, actors and athletes command high salaries because they do put money in someone's pocket. High quality executives do the same thing. Except that sometimes, they put the brakes on a decline in profitability, rather than cause an increase. Either way, it's something that a stockholder values.

Since we're talking about companies that have accepted public money to avoid bankruptcy, the analogy is even more appropriate. They absolutely need to hire one of the big guns of finance. And if one of these guys can be paid ten or twenty times more at a non-restricted company, I have no doubt that they will head that way.

And that brings up a question that is entirely unrelated to the analogy thing... What will companies do to get around the salary cap? Can they give RSUs as incentives? A villa in Malaga? Some other sort of deferred compensation? Because they will find a way.
You don't actually believe this crap, do you? I mean, have you looked at a newspaper in the past six months? Do you really think this is a non-failing system run by competent professionals? Do you really think the people who have been in charge of getting these companies to where they are now have any talent at business management whatsoever?

You don't actually believe this crap, do you? I mean, have you looked at a newspaper in the past six months? Do you really think this is a non-failing system run by competent professionals? Do you really think the people who have been in charge of getting these companies to where they are now have any talent at business management whatsoever?

Which part of "They absolutely need to hire one of the big guns of finance' did you have difficulty with? Or was it part where I said that they sometimes stop declines?

Which part of "They absolutely need to hire one of the big guns of finance' did you have difficulty with? Or was it part where I said that they sometimes stop declines?
It's the part where you seem to think the "big guns" that are currently already at the top executive levels have not proven themselves to be utterly incompetent at best and crooked at worst. It's the part where you look at the CEOs and other top level execs at places like Goldman Sachs and the big banks, and other non-finance corporations, and think of them as a "talent pool." It's the part where you argue that we should want to retain these people. I am wondering what part of their continuous record of fuck-ups you missed. How many times does a handyman have to burn your garage down before you look for a new handyman?

EDIT: Look, you and I obviously have diametrically opposed ideas of what would be the best way to run the US economy. Whatever. Even if we stuck with the system we currently have, why should we want to keep THESE PEOPLE in positions of influence and control in it?

I think the limit should be applied specifically to the executives who were employed at the time when those funds were disbursed. Otherwise, it will be very difficult for these companies to attract high-quality executive staff to replace the incompetent morons currently holding those positions; the last thing we need is those losers driving their companies further in to the ground on the taxpayer's dime.

Otherwise, it will be very difficult for these companies to attract high-quality executive staff to replace the incompetent morons currently holding those positions; the last thing we need is those losers driving their companies further in to the ground on the taxpayer's dime.

But that is the American way. When you are an executive; you are rewarded for success, failure and simply warming a seat.

I think the limit should be applied specifically to the executives who were employed at the time when those funds were disbursed. Otherwise, it will be very difficult for these companies to attract high-quality executive staff to replace the incompetent morons currently holding those positions; the last thing we need is those losers driving their companies further in to the ground on the taxpayer's dime.

This sounds very sensible.

But that is the American way. When you are an executive; you are rewarded for success, failure and simply warming a seat.

Doing a half-assed job and stealing everything that isn't tied down because they were dumb enough to give you an NSA golden parachute...beautiful. If shareholders were a little more active, maybe there would be less bullshit going on but most shares are owned by institutions and mutual funds with little power.

You know, here’s my thing. There are essentially two schools of thought on this:
The first argues that, since these companies are using public money, my money to keep afloat, that money should be used for actual purposes of the company, and for the benefit of the public good, not an inflated executive salary, especially in light of recent poor performance by executives.

The other argues that to fix these companies, you need the best of the best. People like Jobs, and Gates, and Buffet, and they won’t get out of bed for 500k a year.
So here’s my suggestion. Pay them up to 500k a year. The rest, they can earn if their company makes certain benchmarks. If they do reach those benchmarks, they earned it. Likewise the very best shouldn’t be dissuaded. If they’re truly that good, they should feel confident in their abilities.

If they don’t make those benchmarks however, well, I want my money back.

You know, here’s my thing. There are essentially two schools of thought on this:
The first argues that, since these companies are using public money, my money to keep afloat, that money should be used for actual purposes of the company, and for the benefit of the public good, not an inflated executive salary, especially in light of recent poor performance by executives.

The other argues that to fix these companies, you need the best of the best. People like Jobs, and Gates, and Buffet, and they won’t get out of bed for 500k a year.
So here’s my suggestion. Pay them up to 500k a year. The rest, they can earn if their company makes certain benchmarks. If they do reach those benchmarks, they earned it. Likewise the very best shouldn’t be dissuaded. If they’re truly that good, they should feel confident in their abilities.

If they don’t make those benchmarks however, well, I want my money back.
I think we should demand the money back, anyway. It's really too late for that, but I really like the way the Chrysler problem was handled... Loan the company money, provide oversight, demand repayment. In fact, the Chrysler loan resulted in a $660 million profit to the U.S.

http://www.propublica.org/special/bailout-aftermaths

You know, here’s my thing. There are essentially two schools of thought on this:
The first argues that, since these companies are using public money, my money to keep afloat, that money should be used for actual purposes of the company, and for the benefit of the public good, not an inflated executive salary, especially in light of recent poor performance by executives.

The other argues that to fix these companies, you need the best of the best. People like Jobs, and Gates, and Buffet, and they won’t get out of bed for 500k a year.
So here’s my suggestion. Pay them up to 500k a year. The rest, they can earn if their company makes certain benchmarks. If they do reach those benchmarks, they earned it. Likewise the very best shouldn’t be dissuaded. If they’re truly that good, they should feel confident in their abilities.

If they don’t make those benchmarks however, well, I want my money back.
Under normal circumstances I do not believe in pay caps. I also do not believe it is a good business model to have your CEO making several hundred percent more than the average employee in the company, but that's a separate issue and one that can be addressed by other means than pay caps.

However, these are not normal circumstances, and the companies that take TARP funds are not playing with their money. They are playing with ours. I think pay caps are reasonable under these extreme circumstances. New executive hires should be willing to take on a couple of years of lower pay in exchange for agreements to receive higher compensation packages when they succeed in bringing the company up to certain benchmarks. Executives who are not willing to make such a commitment for the future -- the company's, the economy's, their own personal future -- are likely to be the kinds of people who created this problem in the first place, and I don't want them.

GOBAMAWIN made a good point. If what he says is true, some companies that need TARP funds but don't want to be limited by pay caps may already be feeling a strong motivation to take necessary radical action to pay back the TARP money and get off the government teat and out from under the government rules as fast as possible. At first blush, at least, that seems like a good thing.

"Managers" of bank divisions have little to do with setting policy for what products are to be marketed. In any event, even if there are good managers with profitable divisions, if the overall health of the bank is bankruptcy/bailout mode, it matters little what the manager of a particular division is doing. Financial institutions are run in a manner where each division is essentially its own profit center. So, each divisional manager is judged based on the performance of his division, rather than the institution as a whole. A rule like this misses that point, so the guy who is running a profitable division gets the same treatment as the woman running her division into the ground.

In any event, this rule is meaningless. I can think of at least two ways to get around this rules. Things like this play well for the rubes, but they won't prevent executives from collecting the big bucks.

What about the fact that several of the countries largest banks were FORCED to accept TARP money by order of the Federal Reserve? Even if they didnt want/need it? Should they be limited as well in their actions?

And before you ask why they were forced to take money its because the CEOs of the largest 9 banks in the country went into a room with the Federal Reserve and the Federal Reserve told them they were all going to get TARP money wether they liked it or not. To only give it to the banks that "needed" it would be a huge red light signal that would cause further panic and a run on those banks getting the funds. So the Fed instructed that all nine of these banks would be receiving funds regardless if they liked it or not.

Under normal circumstances I do not believe in pay caps. I also do not believe it is a good business model to have your CEO making several hundred percent more than the average employee in the company, but that's a separate issue and one that can be addressed by other means than pay caps.

However, these are not normal circumstances, and the companies that take TARP funds are not playing with their money. They are playing with ours. I think pay caps are reasonable under these extreme circumstances. New executive hires should be willing to take on a couple of years of lower pay in exchange for agreements to receive higher compensation packages when they succeed in bringing the company up to certain benchmarks. Executives who are not willing to make such a commitment for the future -- the company's, the economy's, their own personal future -- are likely to be the kinds of people who created this problem in the first place, and I don't want them.

GOBAMAWIN made a good point. If what he says is true, some companies that need TARP funds but don't want to be limited by pay caps may already be feeling a strong motivation to take necessary radical action to pay back the TARP money and get off the government teat and out from under the government rules as fast as possible. At first blush, at least, that seems like a good thing.
This is exactly what is intended when a company gives stock options, RSUs, or whatever form of stock-based compensation to its employees. The idea is to motivate the employees to drive up the price of the stock. Well, sometimes Enron happens...

Much better to just set some targets and make the compensation cash. I keep thinking there's already a cap on compensation of $1,000,000 cash, but I can't find out the details. This sort of cap would explain the great amount of compensation that is already stock-based.

http://www.leveragedsellout.com/2008/09/benefit-crashers/
Earlier this week at a mid-sized private equity firm, Jeremy walked into Gopal’s office and slapped a printout down on his keyboard, disrupting an intense modeling session.

“What the fuck, son?” Gopal reacted, irritated, hastily Ctrl-Z’ing.

[...]

“Gonna be a sick benny!” Jeremy insisted. “The start of a new season!” The imaginary beat reemerged and Jeremy started thinking back to last year and before, when he and Gopal had hit every benefit humanly possible. They had helped fund causes ranging from a breast cancer clinic in Ohio to a school for the blind in Penang. They had personally stopped genocide in Bolivia.

The duo took pause as the clips from past benefits flowed over them in a series of waves: girl after girl after girl. A testament to the females who run and attend benefits, the professions of the ladies Jeremy and Gopal took down read like a Career Guide for Women from the early 1900’s: schoolteacher, secretary…homemaker.

Both guys were green to the city, but with a navy blazer with gold buttons, a 6:1 girl/ guy ratio, and the shared goal of world-saving, it seemed almost impossible for them not to succeed. Gopal and Jeremy just spread their arms, leaned back, and fell. And somehow, they’d end up in their Ikea MALM beds holding some dinner for two voucher with a girl or three by their side. As easy as a trust fall at an MBA orientation retreat, without the weird Wharton dudes grabbing at their balls.

They sighed in unison—they did so much good in so little time.

Reluctantly, Gopal snapped back to reality. Shaking his head, he couldn’t believe what they were even thinking about: “Bro. The fucking economy is falling apart. Lehman just went bankrupt, Merrill got acquired by fucking BofA—BoafA, dude.”

“It’s like fucking Target just acquired Neiman Marcus, and you are coming to my desk talking about some random benefit? This is not 2006!”

[...]

While a few might still be planning on saving “the kids,” most of Wall Street is pretty concerned with just saving itself. Over 150,000 Bankers have lost their jobs, the markets are completely chaotic, and there is no end to this downturn in sight. As Peter G. Peterson , 82 year old co-founder of The Blackstone Group, eloquently put it: “This is a complete clusterfuck.”

The effects of this crisis are numerous and spread into myriad sectors: retail, housing, et.al. But, in typical local-minded fashion, most analysts and reporters have completely neglected the impact on Benefit Season. When you put 150,000 bankers out of a job, the people most significantly affected are not the bankers themselves or even the citizens of our country. No, it’s the poor children of developing nations who suffer the most—the kids.

The reason is simple: every year, the benefit circuit targeted at young professionals generates millions of dollars in philanthropic funds. A single event can generate up to $100,000, and they occur all the time. Classic trickle-down economics. For the attendees, 98% of whom work in finance, it’s a welcome change of pace from the traditional club scene and a small penance for the sins of everyday life. For the children of the Third World, it’s everything.

[...]

As the line inched forward and Jeremy and Gopal prepared to make their move through a back entrance, a young Jewish girl in a blue sun dress got up from behind the table where the tickets were sold. Gopal and Jeremy knew her well—Emily Cohen, a veteran in the benefit scene. She was a petite girl with a fiery spirit, brought in to various, completely unrelated benefits purely as an enforcer. She was a legend, one of the toughest obstacles in benefit crashing.

Emily got up from her seat. Standing on 4-inch heels and rocking her DVF dress like it was bulletproof, her voice echoed out onto 10th avenue. “This is the last time I’m fucking saying it!” she commanded. And in a grandiose gesture, she held up a green AMEX in one hand and a pair of scissors in the other. Her words pierced the air and souls of everyone in line:

“We are not accepting Lehman Brothers Corporate Cards.”

And then, she cut the card in half.

I'm sorry, but I can't be serious today. At any rate, explore that website. Slightly satirical, yes, but nothing is ever only satire. And from what I've seen a lot of this stuff is very real.

Just an observation based on reading the thread, but this seems to me to be a battle between ideology and reality.

The ideology of how business/markets should work says "Higher pay = better talent."

The reality of what we have seen actually happen says "Higher pay is not an attractor at all. The US executive pool is a closed club based on personal networking that keeps CEOs, CFOs, COOs, etc, in their jobs regardless of performance and with their compensation packages negotiated independently of performance as well (evidence: the fact that poor performance does not lead to reduction of compensation)."

Idealogy counters with "But higher pay = better talent. It says so right here in the How To Run a Free Market Handbook. If we pay them less, we'll lose their talent."

Reality: "Their talent sucks."

Ideology: "No, it doesn't, because their pay is high. See, it's right here: higher pay = better talent."

Reality: "They ran their companies into the ground."

Ideology: "'Tis but a scratch."

And so on. I really don't see this ending in any other way than Reality carrying on with finding a way to fix the problem while Ideology is left behind with no arms and legs, screaming about how it will bite our bloody legs off if we'd just come back to keep fighting with it.

the real question here is.....What is the airspeed of an unladen swallow???

And that brings up a question that is entirely unrelated to the analogy thing... What will companies do to get around the salary cap? Can they give RSUs as incentives? A villa in Malaga? Some other sort of deferred compensation? Because they will find a way.

ive actually been to Malaga...lots of Brits on vacation there. however, most people in the US have no idea where Malaga is...maybe if you had said the Hamptons...

Improper analogy. The reason high quality atheletes and actors get paid well is precisely because their talent/name recognition makes it profitable for the film studies/sports teams to pay them that. Tom Brady is a damned good quarterback. Being a damned good quarterback helps him win games. Winning games sells ticket. Sold tickets make money. The Brady earnes his salary.

Since, however, we're talking about companies that need government welfare to stay afloat, the analogy fails. If Tom Brady didn't put butts in seats (IE, make the business profitable) he wouldn't command that salary.
Yes, and when these sports guys making millions no longer perform well, they get traded and/or dumped, an option that we don't have with these CEO/executives, until they did not perform well. Instead of dumping them, we pay them less for their bad performance. Actors, same thing, if their movies tank, they don't get paid as much on the next one. Same idea. The BIG difference, of course, is that actors and athlets do not affect the public welfare like corporations, so if they don't perform well or have to declare bankrtupcy, no one turns around and gives them public taxpayer money to prop them up. Not so like these financial/banking corporations, which have now caused injury to people, countries, charities and so on, worldwide.

You know, here’s my thing. There are essentially two schools of thought on this:
The first argues that, since these companies are using public money, my money to keep afloat, that money should be used for actual purposes of the company, and for the benefit of the public good, not an inflated executive salary, especially in light of recent poor performance by executives.

The other argues that to fix these companies, you need the best of the best. People like Jobs, and Gates, and Buffet, and they won’t get out of bed for 500k a year.
So here’s my suggestion. Pay them up to 500k a year. The rest, they can earn if their company makes certain benchmarks. If they do reach those benchmarks, they earned it. Likewise the very best shouldn’t be dissuaded. If they’re truly that good, they should feel confident in their abilities.

If they don’t make those benchmarks however, well, I want my money back.
That is exactly what Obama is doing--they can go back to earning whatever they want when they pay back the taxpayer money they borrowed.

the real question here is.....What is the airspeed of an unladen swallow???

African or European?

This is exactly what is intended when a company gives stock options, RSUs, or whatever form of stock-based compensation to its employees. The idea is to motivate the employees to drive up the price of the stock. Well, sometimes Enron happens...

Much better to just set some targets and make the compensation cash. I keep thinking there's already a cap on compensation of $1,000,000 cash, but I can't find out the details. This sort of cap would explain the great amount of compensation that is already stock-based.
What is intended is not as important as what actually happens. For example, executive compensation is supposed to be tied to performance, only it isn't. No matter how bad the performance, the compensation never goes down. That's just one example of how the practice does not match the intention, and why I'm not interested in the bullshit of this system, nor in it's "intentions." These people should not get to make the rules if they take our money.

What is intended is not as important as what actually happens. For example, executive compensation is supposed to be tied to performance, only it isn't. No matter how bad the performance, the compensation never goes down. That's just one example of how the practice does not match the intention, and why I'm not interested in the bullshit of this system, nor in it's "intentions." These people should not get to make the rules if they take our money.
Yes, like Starbucks, they tell you they are raising the prices because the cost of coffee beans went up, but the price of coffeee never comes down when the cost of beans goes down. Amazing how that works! Although I don't really expect them to lower their prices ever, the stated reason for the price increase does not match what occurs when that reason is gone. The second time it happened, I stopped going to Starbucks.

Doing a half-assed job and stealing everything that isn't tied down because they were dumb enough to give you an NSA golden parachute...beautiful. If shareholders were a little more active, maybe there would be less bullshit going on but most shares are owned by institutions and mutual funds with little power.
You are right, the days of "shareholder control" over corporations is kind of like the days when you actually got stock certificates. A theory and method of doing business that is long gone. . . .