Obama's Executive Compensation Plan

[Don Corleone]

You're free to pay your executives whatever you want to with your own money. Shareholders and banks (the 2 normal sources of capital) place restrictions on executive pay, why shouldn't the government when they take up the role of investor.

Besides, rewarding somebody for gross incompetence really rubs me the wrong way. If Citibank feels so morally outraged that the White House would dare to suggest that they're overpaid, don't take their money!

[Ice]

Besides, rewarding somebody for gross incompetence really rubs me the wrong way. If Citibank feels so morally outraged that the White House would dare to suggest that they're overpaid, don't take their money!

From the Article:

It sounds very good if you believe that the people who are now in charge were responsible for the disaster. But these disasters were caused by a small segment of the managing population and the problem is proper oversight by senior management, most of which are gone. Now there is a cadre of executives who are going to be punished or penalized for the actions of others. I am concerned that these institutions won't be able to maintain the quality of their hires.

I'd have no problem if the pay restrictions were on the idiots who caused this. Unfortunately, it's not really that simple.

[Don Corleone]

From the Article:



I'd have no problem if the pay restrictions were on the idiots who caused this. Unfortunately, it's not really that simple.

It's not simply a matter of punishment on those responsible. It's a matter of "do you really need a government bailout or don't you"? If your CEO is raking in $10million, maybe the answer is no.

Seriously, let's consider the worst case scenario proposed by Ms. Meyer. The position and tone of her arguments seem to indicate that she believes maintaining the maximum number of corporate entities is a goal, in and of itself. But should it be?

Let's say AIG takes the TARP money, and in doing so, restricts executive pay. And as a result, the wall-street regulars all bail off of AIG's senior management team. What happens next? They have to go to the minor leagues. Since it was conventional wisdom and business-as-usual that caused the current mess, wouldn't fresh blood likely be a good thing?

And there's another syllogism in her article. She highlights that AIG is hemorraghing talent right now. But the executive restrictions haven't gone into affect yet. So these guys are paying themselves gobs of taxpayer cash, and leaving anyways.

Finally, I conclude that even if the worst were to happen, and some troubled instutions weren't able to retain top talent and ended up going under... is that so terrible? It's not as though the talent is just going to stop working... they'll be adopted into higher-paying (therefore, non-TARP limited, therefore, not in fiscal crisis) competitors.

This, by the way is reason #2 I believe the only thing the government ever should have done was buy troubled assets directly. Had they stuck to that approach, even if AIG went under, the government still had the assets they purchsed. By handing a bag of money to a thief and hoping this time he doesn't pocket it... well, you can see how well it's working out.

[Major Robert Dump]

It doesn't matter if the specific individuals being capped were responsible or not, what matters is that they are part of a company that is being bailed out at the taxpayers expense.

I understand this is a form of socialism, I understand it violates some of the basics of free market capitalism -- but how does saving failing companies and nationalizing banks not do the same thing? How does giving auto companies who can't manage their business and peddle subpar goods a handout not qualify as socialism when it essentially stifles competition from the other car companies who play on the same field as the Big3? How does a state paying for a large companies parking and plumbing in order to lure them to the state not qualify as socialism when 99.9% of that companies competitors recieved no such assistance

My point is that's its absolutely ridiculous that we this perverted system masquerading as capitalism yet critics of this salary cap cry about interfering in the market. Hell, McCain ran an entire campaign about Obama turning us socialist as billions of dollars were being poured into banks and billions more were being promised to car companies. Give me a break.

Using the logic of not capping salaries for these companies on bailout funds, well, poor people on welfare shouldn't have a limit in benefits and in fact should get a raise every year. I mean really, it is the same thing in theory and procedure. I'm curious how many people against the salary caps are for more lax qualifications for social welfare, and how many people against drug and alcohol testing of welfare recipients are for the salary caps.

As for caps for people in office I think the only people not for that are the people in office. Still, there's a difference between the pols salaries and the exec caps because pols were elected or appointed, and stupid spending on retreats and big dinners and high salaries are kind of expected because they are slimy politicians after all.

[Ice]

It's not simply a matter of punishment on those responsible. It's a matter of "do you really need a government bailout or don't you"? If your CEO is raking in $10million, maybe the answer is no.

Perhaps, although 10 million is fairly small peanuts compared to the billions we are giving these firms.

Seriously, let's consider the worst case scenario proposed by Ms. Meyer. The position and tone of her arguments seem to indicate that she believes maintaining the maximum number of corporate entities is a goal, in and of itself. But should it be?

If not, what was the point of spending how hundreds of billions of dollars bailing them out?

Let's say AIG takes the TARP money, and in doing so, restricts executive pay. And as a result, the wall-street regulars all bail off of AIG's senior management team. What happens next? They have to go to the minor leagues. Since it was conventional wisdom and business-as-usual that caused the current mess, wouldn't fresh blood likely be a good thing?

Fresh Blood? Sure. Lower Talent Fresh Blood? No.

And there's another syllogism in her article. She highlights that AIG is hemorraghing talent right now. But the executive restrictions haven't gone into affect yet. So these guys are paying themselves gobs of taxpayer cash, and leaving anyways.

It could be due the fact that they expect a pay cut and are leaving before such a thing is enforced. I really don't know why though.

Finally, I conclude that even if the worst were to happen, and some troubled instutions weren't able to retain top talent and ended up going under... is that so terrible? It's not as though the talent is just going to stop working... they'll be adopted into higher-paying (therefore, non-TARP limited, therefore, not in fiscal crisis) competitors.

Like I said before, what was the point of bailing these companies out if we are just going to let them fall to the "minor leagues"? It really doesn't make sense.

This, by the way is reason #2 I believe the only thing the government ever should have done was buy troubled assets directly. Had they stuck to that approach, even if AIG went under, the government still had the assets they purchsed. By handing a bag of money to a thief and hoping this time he doesn't pocket it... well, you can see how well it's working out.

I'm sure Mr. Obama and our treasury secretary agree with you now. I agree with you