Deliberately courting failure...Government to slash salaries....

[Headless Thompson Gunner]

I did just hear an interview with Ken Feinberg on the radio, where he stated that a large portion of these are not straight pay cuts, but conversions from cash to stock, for whatver that's worth.

I believe the reductions are 90% of your salary and 50% of your stock options, plus a requirement that any stock options not be vested for at least 5 years.

So, depending on how your pay is structured, it's a pay cut of anywhere between 50% and 90%, along with a hefty delay in receiving major chunk of your pay.

[Headless Thompson Gunner]

I thought it was scary when Obama fired the GM CEO.  Ominous, as it were...   :|

Yup.  the GM CEO was first, cause he was the easiest target.  Now they've done the banking execs.  I heard on the Tee Vee this weekend (some news channel show, I forget the details) that our illustrius Pay Czar has another 60 execs lined up for the next round.

But don't worry.  It may take 'em a bit longer, but they'll get around to cutting your salary and mine soon enough.

[Headless Thompson Gunner]

I agree it's a punitive move, but I guess it's all relative...since "the best and the brightest" already succeeded in bankrupting their companies and tanking the global economy.  Sadly, they will just move on and carry on business as usual. They'll all just continue to develop and utilize new means of transferring wealth from us to themselves, no matter where they work.  At least the incompetent and slow might stick with what they know, like producing goods and services that have actual value, and are perhaps desired by customers...unlike derivatives, hedge funds, or other clever things, known and understood only by "the best and brightest". 
Who knows, there may actually be some bright people who will step into those jobs, only for the satisfaction of the challenge and an opportunity to make a paltry $1-2 million a year base, and bonus based on successful performances. 
The so called meltdown succeeded at shining a little light on the situation, but the fleecing continues at break-neck speed.  Obama and friends (including Wall Street) are just throwing a bone to the masses.
I just wish I could figure out how to hedge my finances to protect my family from them.  I'm thinking a paid for double-wide trailer, with a wood burning stove (in the boonies), a big garden, and a good squirrel rifle might be the best investment going. I don't think they can think small enough to steal or transfer those things from me to them.

I would agree that some of these execs made bad decisions, and ought to be punished.

I absolutely, 100%, wholeheartedly disagree that Obama is the right person to impose any punishments.  It isn't any of his business whatsoever, and he has no right to meddle in these affairs.

 

[Waitone]

History is relevant.  IIRC President Clinton railed against excessive pay of evil poobah's and went to congress for relief.  Congress, in its wisdom (yeah, I know but humor me) said "foul" and passed legislation which limited poobah pay to something like $800 grand per year which was full deductible.  Anything over the figure was not deductible as a business expense.  The effect was predictable.  Businesses simply shifted poobah compensation from salary to perks, bonuses, and deferred compensation.  Due to the nature of the business Wall Street types want after bonuses like a retriever goes after a ham sandwich.  Now Obama rides into town decrying excessive bonuses that were created by Clinton in a fit of righteous indignation over excessive pay.

Just doesn't seem to be any pleasing these people.  Which begs the question, "Why do they continue to support 'em?"

[Nitrogen]

I would agree that some of these execs made bad decisions, and ought to be punished.

I absolutely, 100%, wholeheartedly disagree that Obama is the right person to impose any punishments.  It isn't any of his business whatsoever, and he has no right to meddle in these affairs.

 

Only reason I disagree is because these banks and whatnot took my money.  When Obama decides to regulate pay of a specific company that did NOT take my money, then he will have gone too far.

[of course I mean in the form of a bailout, not a regular contract.]

[Headless Thompson Gunner]

Only reason I disagree is because these banks and whatnot took my money.  When Obama decides to regulate pay of a specific company that did NOT take my money, then he will have gone too far.

[of course I mean in the form of a bailout, not a regular contract.]

Lending money to someone does not grant you control over how they behave.  This is (or ought to be) basic common sense.

[RocketMan]

There has already been some trial balloon noise made about going after executive pay outside of those companies that received bailout funds.  This was mentioned in an earlier thread.
Barney Frank and a few of his cronies have also made noise about taking 401(k)s and IRAs because it is unfair that some have had a "free ride" with regard to their associated tax deferrals.
All of this should be no surprise: the American people voted for socialism in the last election.

[MicroBalrog]

Lending money to someone does not grant you control over how they behave.  This is (or ought to be) basic common sense.

I will inform the Fed of this!

[HankB]

I've got serious reservations about the bailouts, but since they HAVE happened . . .when we're tallking about companies that have been run into the ground to the degree that they need tens of billions of dollars - let me repeat that, tens of billions of dollars in taxpayer funds to rescue them . . .

The CEO, CFO, and entire BOD ought to have been fired out of hand for sheer incompetence, and prohibited from jumping to any other company being bailed out.

And spare me this crap about "the best and the brightest" needing to be retained. If some large company has an operating unit that's turning a profit, fine . . . leave the guy running that unit alone; HE is EARNING his pay. Otherwise, a thorough housecleaning is in order; the "best and brightest" do not repeat not run giant megacorporations into the ground.

[Nitrogen]

Lending money to someone does not grant you control over how they behave.  This is (or ought to be) basic common sense.

Sure it does.  When the bank lent me money to buy my house, they control how I behave.  They mandate that I purchase insurance to protect their investment in me.  They mandate that I pay them on certain dates, and pay them extra for their trouble.

If you borrow money from someone, they will mandate that you protect their investment in you.  If you borrow money from the government, they will do the same, and they have the power to change the rules in midstream via legislation.

[Headless Thompson Gunner]

Sure it does.  When the bank lent me money to buy my house, they control how I behave.  They mandate that I purchase insurance to protect their investment in me.  They mandate that I pay them on certain dates, and pay them extra for their trouble.

If you borrow money from someone, they will mandate that you protect their investment in you.  If you borrow money from the government, they will do the same, and they have the power to change the rules in midstream via legislation.

You agreed to live up to certain terms when you took the loan, such as maintaining insurance and paying the loan back according to an agreed upon schedule.  The bank has no power to enforce anything at all except what you willingly agreed to upfront.

Your mortgage bank can't come in and tell you what color to paint the walls of your house, or how often you must mow your lawn, or whatever else.  You car loan lender can' tell you how to drive your car, or how to maintain it, or hwo can borrow it, or anything else.  Your credit card company can't tell you what to do with any of the stuff you charge onto your card.

All the lender can do is enforce the terms of the loan.  They have no other rights or powers whatsoever.  None!

The loans to the big banks are no different.  FedGov has no more right to run the big banks because they gave 'em a loan than your mortgage bank has a right to make you hire the bank CEO's brother-in-law Joe Bob to replace your furnace.

FedGov has no right to do anything except enforce the ortiginal terms of the loans they made to the banks.  Those terms cannot be changed on the fly.  Those terms did not include any provisions that the government would get run the bank.

Get a clue, people.  You're falling for a red herring.  Obama knows the big bank execs are unpopular right now.  He knows he can get away with abusing them.  This has nothing to do with loans or bailouts or the economy, and everything to do with power.  Obama sees a chance to steal a huge chunk power for himself, so he's doing it.  He's going to get away with it because the country is cheering on the abuse of hated executives, and nobody is bothering to stop and think about what's happening here.

What happens when FedGov decides to tell you how to run your household the same way they've told the banks how to run their businesses?  Do you think they can't?  Do you think they won't?  Do you think they're only going to abuse other people and never abuse you?  They own your mortgage, you know, either through Freddie/Fannie or through the banks they've taken over.  By your reasoning the fact that you owe them money for your house grants them the authority to control everything that goes on in, around, and relating to, your home.  

Right?

They also now own the car business, the student loan business, the credit card businesses, and the investment brokerages.  By your reasoning they can control most every aspect of your life, everything from where you can travel, to what you can learn and what careers you can pursue, to what you can spend your money on and how you can use the things you've spent your money on, and whether or not you're allowed to build up any savings or personal wealth.

Wake up, people!

[roo_ster]

I think HTG nailed it.

[Lee]

Get a clue, people.  You're falling for a red herring.

I'd agree with you that far...but I think the red herring is that he is appeasing the masses with some selective punishment, while the real players continue to play tricks with computer programs to make the numbers look better and make everyone feel all warm inside. These guys are like the Robber Barons of the last century, except they create nothing but wealth for themselves....even if only temporary in some cases.  The only problem I have with what BO's doing, is that it's not universal.  I could possibly agree with you if we had just let every bank in the world fail...and most economies...but we didn't. ..and for good reason.

[mellestad]

I suppose it depends on how it is handled, as to whether or not I am outraged.

1) In principle, I don't agree with any kind of salary caps, for sport or business.
2) However, if a business takes Federal money then the executives give themselves massive bonuses while the business is still failing, I can see how that could be considered outright theft.  Like if a friend says they are starving and needs a loan, you give it to him, then you find out he spent all the money on this and that.

So I guess I would have to say I would need to see a case by case analysis on why they step on a particular business/bank and make a determination individually.

Then I can say how offended I am :)

[thebaldguy]

These folks ran their companies into the ground. If these are the best and brightest, then let them leave. I'll do just as good of a job for half the price.

[Monkeyleg]

Yep. Just sit around in that executive suite and wear expensive suits. Hell, I can do that. Anybody can. That's why the boards of directors offer these guys millions. Go to a board meeting. I'll bet they'll offer you millions, too, if you ask real nice.

Since Obama wants to control the outrageous compensation given to these thieves, do you think the voters can limit how much money he can make after he leaves office? After all, we'll be paying his pension--if he doesn't bankrupt the country first.

[Scout26]

These folks ran their companies into the ground.

No. they. did. not.

makattack nailed it.  They played by the rules of the market, and the .gov distorted the market.  Remember Milt Friedman and Free to Choose ?  The market and prices communicates information (scarcity or abundance) about any product.    The problem was is that the .gov distorted the market by removing the risk (through Freddie and Fanny).  Think about it.  You go to the horse track knowing that you could bet on any horse and if wins you got to keep you winnings and that if your bet lost, you rich uncle would cover your losses, no need to do any handicapping, just bet on each horse.  The problem was that all the horses broke their legs.    

Whenever there's a major economic meltdown, generally the market has been distorted somehow and generally it's the .gov that doing the distorting.

[Lee]

After all, we'll be paying his pension--if he doesn't bankrupt the country first.

I think the last few Presidents had that one covered already.  The money is just flowing in a different direction.  

I think George W. (we have a no-cutesy-name rule here) was trying to raise himself up from possibly being rated as "the worst President ever" to "Destroyer of the modern World."
"Man that's lak ten of your ball players having heart attacks on the sme day of the World Steeries....it's hard work". BO came in to relive him, and now he just sits in the dugout waiting to see what perks he gets for being "Wort President ever"

Good Executives are worth their weight in gold, it's just too bad the standard rate has become 20 people's weight in gold, + another ton for bonus.regardless of performance.  That's fine if you're making the company money -not fine if the company is on it's knees begging for trillions from me and you.

[Scout26]

1.  They never should have been bailed out/stimulated/given free money.
2.  Executive salary and bene's are negotiated upfront.  It's a contract, you do 'X', then you get paid 'Y'.
3.  How come when sport figures have a crappy year or season, they don't have to give the money back ?  Didn't they help drive their team into the ground ?


I've worked on salary most of my life.  I've worked at a place where I did my part and my area/plant/division did what was required to hit the bonus numbers and then be told that because the other part(s) of the company screwed the pooch, no one would be getting bonuses.  Didn't stay at that place very long.

One place I worked for stated right up front:  We expect you to make at least 25% of you income in bonuses.  If you're not hitting the goals to get that 25%, then your not doing your job. "
Friends of mine that work in the financial sector get a pittance as base salary.  The rest is bonuses based on performance.  So be careful when the .gov starts villianizing those "Executive Bonuses", Directive 10-289 isn't far behind.
  

[makattak]

I suppose it depends on how it is handled, as to whether or not I am outraged.

1) In principle, I don't agree with any kind of salary caps, for sport or business.
2) However, if a business takes Federal money then the executives give themselves massive bonuses while the business is still failing, I can see how that could be considered outright theft.  Like if a friend says they are starving and needs a loan, you give it to him, then you find out he spent all the money on this and that.

So I guess I would have to say I would need to see a case by case analysis on why they step on a particular business/bank and make a determination individually.

Then I can say how offended I am :)

How about this one:

http://www.businessweek.com/ap/financialnews/D9B3HEI00.htm

The pay package given to Freddie Mac's new chief financial officer should have sent a message from Washington to corporate America about how executive compensation standards must change. Instead, it did just the opposite.

The government-controlled mortgage finance company is giving CFO Ross Kari compensation worth as much as $5.5 million. That includes an almost $2 million cash signing bonus and a generous salary that could top $2.3 million.

Look at how the government is limiting the salaries of the companies it had to bail out!!!!... or, not...

[cassandra and sara's daddy]

Anyone catch Judge Napoitano on Fox News today?  He rattled off several reasons why this deal is unconstituional, but I can't remember his examples.  On a related note, is "Judge" his first name or former profession?

he never made it that far as a state judge in jersey  left that to be a scholar

Judicial and academic career

Napolitano sat on the New Jersey bench from 1987 to 1995, becoming the state's youngest life-tenured judge. He also served as an adjunct professor at Seton Hall University School of Law for 11 years. Napolitano resigned his judgeship in 1995 to pursue his writing and television career.

[HankB]

No. they. did. not.

Yes. They. Did. So.

To be sure, bad government had a role, and bad government continues to plague the economy, but note that only SOME companies have tanked; if .gov was solely responsible, then every company - every company - would go bust or need a bailout. But that's not the case.

When it comes to a company's operations, where does the buck stop, if not at the top?

Banks? There are quite a few banks that are healthy, because they did NOT jump into the sub-prime mess. (One local bank is including this in its advertising.)

Brokers? Not every broker went bust - some managed risk and assets in a rational manner.

Insurers? Not every insurance company has gone bust.

Car makers? GM and Chrysler have been mismanaged for decades - yet Ford is (at this writing) managing to hold on, as are Toyota, Nissan, etc. 

Yep. Just sit around in that executive suite and wear expensive suits. Hell, I can do that. Anybody can. That's why the boards of directors offer these guys millions. Go to a board meeting. I'll bet they'll offer you millions, too, if you ask real nice.

Yeah, I do catch the sarcasm here . . . but just because someone was chosen to fill a highly visible position with a lot of power DOES NOT mean he is well suited or even competent in that position. (Take Obama . . . please.)

[Headless Thompson Gunner]

The failure of a company is not, in itself, evidence of CEO incompetence.  There are often circumstances beyond their control that can have devastating affects on the business and the business environment.

Government has severely screwed up the financial markets.  I won't say the bank CEOs have been flawless and never made any mistakes, but it's absolutely true that this environment is extremely difficult for any finance type company.  Even the best companies and CEOs are teetering on the brink these days.

Any of you Monday morning quarterbacks who think you could have done just as well in this environment, well, let's just say you don't know what you're talking about.

And I'm still waiting for an explanation of how it's any of your business or Obama's what happens to "bad" CEOs.

[Gewehr98]

Obama did it for the children, near as I can tell. 

I've been joking with my Executive Vice President here, telling him that Obama will fire his posterior if he doesn't produce. 

[mellestad]

How about this one:

http://www.businessweek.com/ap/financialnews/D9B3HEI00.htm

Look at how the government is limiting the salaries of the companies it had to bail out!!!!... or, not...

*shrug* That doesn't seem to be about limiting compensation, so I am not offended within the context of this discussion.  As far as being offended overall, I guess it depends on what average compensation is in that industry for that position.  I might have missed something in the article though, feel free to point out specifics.

And I'm still waiting for an explanation of how it's any of your business or Obama's what happens to "bad" CEOs.

Well, companies that take TARP money agreed to follow congressional rules about compensation, so that is their fault if it bites them in the butt.

Companies that were  bailed out by something besides TARP funds agreed to Federal oversight on...well, pretty much everything.  So again, if it bites them it is their fault.

If you just mean in general, outside of the bailouts, then it isn't anyones business unless you are a stock holder in the company, or the industry is heavily regulated by the Fed (regardless of whether or not you think that is right).