Posted on 02/04/2009 11:23:21 AM PST by Oldeconomybuyer
The new pay cap for some of America’s top bankers is rooted in the short-term exigencies of a government bailout, but it also may signal a turning point that affects executive pay for years to come.
On Wednesday, President Obama put a $500,000 limit on annual pay of bank executives whose firms receive government assistance during the financial crisis.
But he also said the new guidelines are “only the beginning of a long-term effort” to realign the way business leaders are paid, beyond the banking industry and other firms getting bailouts.
The announcement comes at a time of public anger about the meltdown of a once-strong financial industry, and as the Obama administration is about to unveil additional bank-rescue plans that are likely to cost taxpayers more than the $700 billion already allocated by Congress.
It also comes as many investors and financial executives say that reformed pay practices need to be part of any long-term solution for the industry’s problems.
“There is a serious problem with compensation [in the financial sector],” says Charles Elson, director of the University of Delaware’s Center for Corporate Governance. Top bankers “convinced the world that they were the smartest human beings on the face of the earth…. It turns out they weren’t all that smart.”
The financial sector has moved to the forefront of the long-simmering national debate over executive compensation, largely because it is receiving the greatest government assistance. But what happens in that industry could set trends that will affect others.
[snip]
(Excerpt) Read more at features.csmonitor.com ...
“The Board of Directors sets compensation. If the major shareholders found it to be “excessive” then the Board would withhold approval.”
Provided you don’t take taxpayer’s money. When you beg for a handout, the rules change.
Bad precedent
He did hit a home run with that one, but they still have the loot?
Bad president, too.
Exactly - note to self: Don’t take TARP or any other federal assistance with strings, because the strings will f*** you up, sooner or later.
Good grief, a $500K on annual pay. No mention of stock options, etc. That will be easy to get around.
Not to worry, their pay will be going down anyway because the banks will fail.
I knew this was coming, and in a certain sense these guys brought it on themselves but still its a terrible precedent and deeply disturbing.
Really?
Who makes the rules?
Goldman announced that they’ll return their TARP money....others to follow. Good deal if you and your employer are cash rich....not so good if you want a loan.
Will this administration put a cap on salaries and expense accounts for the following executives:
UNION LEADERS who benefited from the auto bailout?
SCHOOL ADMINISTRATORS who stand to benefit from the “stimulus”?
LEGISLATORS who receive State bail out funds?
ENVIORNMENTALISTS who receive “stimulus” money to study the green toed frog?
How much is a good pitcher worth nowadays, a quarter back, a singer with a BIG nose? Makes ya feel real good, don’t it?
The same kind people who made rules that allow corporations. And according to the constitution they have the legal authority to change those rules.
You nailed it! This guy is dangerous. He's ringing in socialism in faster than I thought he would. Joe the Plumber had it 100% right.
“only the beginning of a long-term effort”
Remember Obama there is no ‘golden handcuffs’ to keep talented executives at these companies. Those preferred stocks the taxpayer now holds could end up junk.
He who has the gold, makes the rules.
And, he who has the guns, has all the gold he wants.
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