Comrade Obama's salary cap

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People, can we try to stay on topic. This thread is about the merits of the stimulus package and the wisdom of Obama capping executive salary. The global war on terror, Iraq, Afghanistan, etc. have nothing to do with our current economic situation. I know that BDS is a terrible affliction, but please you must seek help and move on.


I guess my major concern about the salary cap is what will be the effect on senior management. Could it be an impetus to drive them out of the company and then bring in new leadership that is hungrier for the upside or we could be forced with the possibility of unqualified people taking over and the business never being able to pay back the money they have been loaned? I'm on the fence on this one. Is it possible that the losses these corporations have had would have been even larger if it weren't for the skill of the CEOs that are already there. I'm not quite ready to just villify everyone who is a CEO. Sometimes a business just can't make money no matter who is at the helm.

Thoughts?

 

The salary cap is only for companies that are receieving bailout money. It's not an unreasonable request that underperforming companies cut back on excessive salaries for those who are most responsible for that performance. When one considers that auto workers were asked to make concessions in pay and benefits, it seems that management should feel the pain as well, if they are going to receive our tax dollars.

There are real hard-working families out there right now that are wondering if they are going to be able to keep their homes and feed their families. These same CEOs had no problems cutting their jobs and sending these people home. So, let me get out the world's smallest violin and play it for all these CEOs who are going to get to keep their jobs and make only 500k a year, because of the generosity of the American taxpayer.

There are some very good CEOs out there. Nobody has "villified" all CEOs. You are confusing some of us with those who make stereotypical comments. Another example would be those who complain about teachers because they belong to the teacher's union or auto workers in the UAW. Those people have no problem "villifying" those workers as lazy, underperforming and being overpaid because they are "union members."

 

So the companies that aren't receiving government bailout monies can pay their CEO whatever the guy can get? I see no problem with that. But Obama has an obligation to use taxpayer money responsibly. And if that means holding the companies receiving the bailout accountable for how they use that money and requiring that they control expenses, then that's what Obama has to do. I know I won't shed any tears for the corporate fat cats...

 

I agree there, Gnarff. If a company does not get any outside funding, it can allocate its money as it wants - within the limits of the law (as in, it should still pay taxes). However, money coming from outside comes with obligations, as it should - whether it's from the federal government or some private source such as a bank. After all, the sponsor has their own responsibilities and duties. In fact, I would expect that a state be more careful than a bank in how it gives out money, since it comes from the taxpayers and every dollar given could be spent on at least 5 other worthwhile projects such as infrastructure, education, defense, research - or, heck, not taken from the taxpayer at all. On the other hand, every other field that gets state money has to spend them according to certain guidelines, and they are probably a lot stricter than what the business gets. Why should John the policeman's wage come with more conditions than Jack the manager's, if both get their funds from Uncle Sam?

As for the bad CEOs, well, I don't think that the goodness of your character relates strongly to how much money you make, and I don't doubt that many people who have been running their own companies are intelligent, wise and overall great folks. However, at work most of us are responsible for our mistakes and what they do, and CEOs should be no different. After all, if they didn't make a mistake, they wouldn't need state funding anyway - so they are being done a favor, and those that complain it's not completely free of strings (as I think quite a few are perfectly ok with what they get) deserve mockery, not pity. After all, I can think of quite a few worse things that can happen to you after you have not been able to keep your company going than being subsidized, being allowed to keep your position, and getting, say, 30-40 thousand USD per month. I guess a lot of their employees wish they'd gotten such a deal. How many people here make over 100,000 USD per year, by the way?

 

I'm just not sure if it is legal. Seems like it might violate some type of "ex post facto" laws if the CEO's already have long-term contracts.

 

It seems fine for those companies where the management is in place for a couple of years at least. If they were there a long time then you can largely blame management for the problems of the company and I'm sure they've already received enough money that there pay is hardly needed anymore.

I can't understand how this applies to new managers though. If a company has actually fired its managers for being incompetent (not that common I know but it does happen) then the company will be trying to hire a new manager whilst paying a ridiculously low wage. I know that doesn't sound right but to be CEO of a company like these ones you can expect a salary far greater than $500k. You're immediately slashing the talent pool available to you with this scheme, though the stock options do appear to be a bit of a workaround for this. It seems a tough sell though. Many of these companies are in grave difficulty. They're expecting to have awful results. A manager will have done a good job if he changes that to merely having poor results. But how will it look if you're giving people bonuses for achieving poor results?

 

The solution is to nationalize the banks, which is what I was hoping Obama would do, but it appears he won't. The Japanese suffered through the 1990s with the same approach we are now taking. The problem is that we expect the same guys who broke the system to repair it. After giving the banks all those billions, why won't they loan it out? It's because they have screwed each other so much over the last 10 years, with the bundled securities, that now they don't trust each other. How would you feel about giving any of these guys money, if they had just sold you a bundle of bad loans? Unless they nationalize the banks, we are in for a r-e-a-l-l-y l-o-n-g haul.

But wait, nationalizing the banks isn't the "American way." We can't have that!

 

Martaug, setting terms when loaning money is perfectly legal. If a company doesn't wish to follow the terms set by the government, it has the right to risk going under by simply not taking the money.

 

George Orwell got it right when he said 'Everyone is epual but some are more equal then others'
I know that it was about communism and lord knows that such a thing would never happen in the western world today....
anyway, it still fits well!

 

Drew, if i'm the ceo of a company with a 10 year contract for $5Million a year, the company can't be forced to cut my salary by another contract.
Otherwise you would see every pro sports team do it every year with all of their high priced players.

 

I was very upset when I heard that the president of one companies receiving a government handout turned around and gave himself and other top executive a large raise.

Hey that is my money they are getting and it was intended to help out with the loan problem. If one of their lower employees goofed up, made bade decisions that employee would not have received a substantial raise and, in fact, would be lucky not to be fired.

The executives goofed and messed up things for a lot of people they don't deserve a raise. I don't know about the legality of the cap but it sounds right to me.

You goof, you pay.

Don't have time for more as I'm off to NYC.