Obama to cap executive pay at bailed-out companies -- $500K limit

[nichomachus]

Screaming and yelling in 3...2.....1


http://www.nytimes.com/2009/02/04/business/04pay.html?_r=1&hp

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

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

President Obama and Treasury Secretary Timothy F. Geithner plan to announce the executive compensation plan on Wednesday morning at the White House.

The new rules would be far tougher than any restrictions imposed during the Bush administration, and they could force executives to accept deep reductions in their current pay. They come amid rising public fury about huge pay packages for executives at financial companies being propped up by federal tax dollars.

Executives at companies that have already received money from the Treasury Department would not have to make any changes. But analysts and administration officials are bracing for a huge wave of new losses, largely because of the deepening recession, and many companies that have already received federal money may well be coming back.

[razors edge]

1. K&R

The gnashing of teeth begins.

I should have gone to Dental school.

[ZombieHorde]

2. $500K is a lot of money for fucking up. I am willing to fuck up for half as much money. nt

[nichomachus]

3. Yeah, but it's going to make people think twice about taking a handout

[MannyGoldstein]

7. What's Their Alternative?

Ask Dick Fuld - he'll tell you.

[JDPriestly]

18. That will mean that the companies only take hand-outs if they really need them.

That's good. That way, the money can be spent on infrastructure and jobs for ordinary people, not windfalls or the corporate executives in the bailed out companies.

[ljm2002]

23. Well golly gee...

...I don't mean to be sarcastic, really I don't, but what exactly is the problem with them "thinking twice?"

If they need it they'll ask for it. If they need it and they don't ask for it, their business will go under, as it should in a free market system.

These are the same assholes who have been preaching free-market orthodoxy to the rest of us, who have helped promote the ideology that has caused organizations like the IMF to impose austerity programs on countries getting loans from them -- austerity programs that, you guessed, hurt the little people and enrich the few.

Screw 'em. If they don't want a bail out, that's just fine.

[Starbucks Anarchist]

10. I'll fuck up for $500.

[jtrockville]

21. Not me. I wouldn't fuck up that bad for anything less than $1m

I have standards, ya know?

[ZombieHorde]

28. Damn it! OK, I will fuck up for $450. nt

[ProfessorGAC]

26. I'll Take The Whole Amount

And, i know i will do better and safer things than any of those fools.
GAC

[MannyGoldstein]

4. And They Have To Be Paid In Mortgage-Backed Securities

Let them eat their own dog food.

[JDPriestly]

19. MannyGoldstein, Write that one to Obama. That's the solution to the whole mess.

"And They Have To Be Paid In Mortgage-Backed Securities" I love it.

[htuttle]

5. There will be a great wailing and rending of (expensive) clothing...

...and gnashing of impeccably capped teeth.

I love it.

[Rosa Luxemburg]

6. All the Executives can take a reduction in pay until 2010

[terisan]

8. The case has not been made for giving big banks more $$$. Bernie Sanders & Kucinich

make more sense than Obama.

No more bailouts-fire Robert Rubin.

[marketcrazy1]

9. more bullshit!!!

""Executives at companies that have already received money from the Treasury Department would not have to make any changes."" Executives at companies that have already received money from the Treasury Department should be fired !!!!

[RB TexLa]

11. I wonder what would happen to the market if say the CEOs of the 40 biggest banks resigned on Thur.

I don't have a problem with this restriction being put into place.

But if I were one of them, I'd be looking at organizing something like this, try to crash the market especially doing it on a Thursday to take it into the weekend.

[marketcrazy1]

12. 1000 point Rally!!!!!

:evilgrin:

[RB TexLa]

13. very doubtful

[JDPriestly]

20. Face it, the CEOs could not crash the market. They really don't do much

at all except "look at the big picture," and chat with their buddies on conference calls and read reports written by other people. That's what those guys have been doing. They are totally superfluous to the functioning of the companies they run. They are figureheads. The people in middle management run the company.

[ProfessorGAC]

27. Some Lower Level Director. . .

. . .will step up for that money just for the power and prestige of being CEO. And, it's likely those folks have every bit the skill and orgainzational talent as the people you're talking about.

It's easy to overestimate the talents of people who rose to that level. The talent could be politics and not organizational or financial acumen. It could also be genetics!

I think they're replaceable. I've been on the board of directors of a bank for 20 years. I've met a LOT of bank presidents. They're mostly replaceable.
GAC

[Christian30]

14. It seems necessary...

I particularly like the idea that any other compensation like stock options is tied to repayment of the tax payers. Given that it will take a while for these companies to be solvent again, it will give the current or incoming CEOs a reason to look toward long-term growth, rather than falsely raising the stock price.

[eridani]

15. Good for him n/t

[slipslidingaway]

16. Sanders proposed this before the 700 billion bailout bill last year

more discussion here.

Rachel Maddow: Bernie Sanders Calls for Accountability for Financial Catastrophe

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=385&topic_id=267895&mesg_id=267895

[Mind_your_head]

17. Sure.

:eyes:

and many companies that have already received federal money may well be coming back.

[Carolina]

22. Those rat bastards don't even deserve that!

what part of not rewarding failure don't all these people get.

These SOBs are already filthy rich and yet they should walk away from the train wreck they created with half a million dollars instead of a gazillion?!

They are thieves and should be treated as such!

If you're homeless, starving and rob a store to feed yourself, YOU GO TO JAIL!
IF you fail to pay your taxes, the IRS is on your ass!

What makes these fuckers so special?

[exboyfil]

25. The problem occurred when the compensation package

was first set by the compensation board of the company. Not only was it too rich (which is a smaller problem) it was structured to reward risk (ie short term profits) without sight of the big picture (viability of the organization) (which is a much bigger problem).

These compensation contracts are no different than any other contract. The company is obligated to do certain things for the CEOs and other highly compensated individuals (usually including a really nice "golden parachute" in the event of termination, purchase of the company by another company, etc).

The government can dictate terms of the bail out money including the willingness of the CEO and other highly compensated executives to renegotiate these contracts, but these inviduals must be willing to deal. Frankly if I was sitting on $10M plus to walk out the door, I would refuse to deal and take my money and leave. Only true believers (I am the only one that can save this company) or power trippers will stay under these conditions.

The way to stop this is insolvency of these banks (which is what should have happened instead of pouring $1T+ into them to create zombies). Even then I am not sure what order the compensation packages come in for determination the distribution of assets (you got to think the management will figure out a way to feather its own nest - they have all along). The bonuses shovelled out the bank door by Thane for Merrill Lynch during BoA acquisition makes me think these crooks will always find a way to get their money.

I am in a much more well run business, but our CEO still made $16M last year. It is too much money, but he did do a pretty good running the company (we made $2B last year). What burns me is the $500,000 in personal use for the company jet. We have been told that we will not get raises next year, and our raises this year will be delayed 3 months.

If you want to stop this crap then you need to get medieval on the compensation committees before they sign these contracts. In our current system with so much passive money tied up in Mutual Funds I don't think this will happen. Companies like Fidelity and Vanguard need to become more aggressive as compensation packages are being set.

[cherish44]

24. they need to make this thing air tight

You know those crooks will try to figure out a way around it. And I personally agree $500K is too much.