Obama caps executive pay tied to bailout money!

http://news.yahoo.com/s/ap/...ailout_executive_pay

Snip-it

WASHINGTON – President Barack Obama on Wednesday imposed $500,000 caps on senior executive pay for the most distressed financial institutions receiving federal bailout
Obama said that massive severance packages for executives who leave failing firms are also going to be eliminated. "We're taking the air out of golden parachutes," he said.
Other new requirements on "exceptional assistance" will include:
_The expansion to 20, from five, the number of executives who would face reduced bonuses and incentives if they are found to have knowingly provided inaccurate information related to company financial statements or performance measurements.
_An increase in the ban on golden parachutes from a firm's top five senior executives to its top 10. The next 25 would be prohibited from golden parachutes that exceed one year's compensation.
_A requirement that boards of directors adopt policies on spending such as corporate jets, renovations and entertainment.
The administration also will propose long-term compensation restrictions even for companies that don't receive government assistance, Obama said.
Those proposals include:
• Requiring top executives at financial institutions to hold stock for several years before they can cash out.
• Requiring nonbinding "say on pay" resolutions — that is, giving shareholders more say on executive compensation.

Sounds like a good plan to me. I can't see why executives should have their cake and eat it too especially at the expense of laying off workers while riding the backs of tax payers. IMO 500k cap is still too high for me and it should be a lot less since it is the very ones that helped get us into this mess.

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"Friends don't let friends drive stock"

I believe that in the Japanese workforce the CEOs only make 7x of what the lowest paid person makes. The CEOs excess salary expectations have always been a thorn in the workforce. The recent excess salaries and bonuses while the the companies they run are losing money is undefensible. The BODs of the various companies are just a good old boy network with CEOs sitting on each others boards granting the excess salaries to each other.

Having the government set salary caps though is just the first step to socialism..the slippery slope senerio. What other segment of the workforce will have the federal government setting salaries? TV stars, movie stars, doctors, but not lawyers as they are the ones that represent us.

well, fear not - there are plenty of discreet ways to compensate those who feel they deserve it.

No matter what is posted about our President Obama, folks will never be happy with him. Crying shame too. America is pi$$ed about the bankers getting too much money. Then the President Obama haters are ticked that he is now the epitomy of socialism. I think that it is great that they are taking away the bankers (crooks) inflated salaries. I wish that I could put America in a chokehold, and still make silly millions. Oh, by the way, it was under Bush's watch that we are at a one trillion dollar deficet.

But those POOR executive deserve all those million dollar salaries because,

They are the ones who made all that money for the company.

YA RIGHT.

I see nothing wrong with a CEO making money even 10 times what his lowest paid employee makes.

But when they get 100, 200 or 300 times that it is just outrageous. They are nothing but a glorified paper pusher.

I say let them eat what they make. If the company makes money then they should,

If the company loses money on their watch then they should lose money.

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Technology is great when it works,
and one big pain in the ass when it doesn't.
Detroit iron rules all the rest are just toys.

quote Originally posted by 84fiero123: ..... If the company loses money on their watch then they should lose money.

yes, that often has been part of the justification of why they make that kind of money - because they take the chances.

well - the dice came up craps - so - stand by the justification - eat it.

quote Originally posted by Pyrthian: well, fear not - there are plenty of discreet ways to compensate those who feel they deserve it.

Yep I hope he capped Bonuses. All this seems to be decrees put out as if they meant something. Are there enforcement groups?

[This message has been edited by 2.5 (edited 02-04-2009).]

Good move by the Obama I think. I have nothing against exec's making a buttload and I don't care how much money as long as the free market allows it. This on the other hand is setting caps on pay for companies that are failing and taking tax dollars to stay afloat, no problem here with that.
A consequence to not loaning money to US companies that are fin trouble that people may not consider is the foreign companies buying our companies for pennies on the dollar if they fail, that IS selling off the USA. It could have been a plan for all we know.

I personally applaud his taking control of the second half of the banking bailout, it was not working the way the last congress set it up at all.

I agree with him, alot of them make too much.

I heard about this on the news and I have to admit, I'm torn on how I feel about it. On one hand, the money they received is a loan. Now, I'm all about free enterprise. As long as a company is privately owned then I don't really care what who's compensation looks like. And I can see how people would like to have top execs not be dipping too deeply into this new government provided windfall of cash. OK, I get that.

But......


I also wonder how many of these companies really want to survive, and would like to hire in some big time "heavy hitters" to fill some upper positions to start turning things around. You aren't going to hire the kind of talent that may be required to turn a company around when you can only offer him a stipend compared to what he might currently be making. So, it could be seen as a good investment to bring in a guy at say a cool mil a year IF he can get the company back on it's feet so it can survive and repay the loan. Otherwise, you're stuck with the same poor managers and execs that drove the business into the ground in the first place. If that's the case, then all the bailout has done is delay the inevitable since nothing will change. Has anyone thought of that?

quote Originally posted by Taijiguy: I heard about this on the news and I have to admit, I'm torn on how I feel about it. On one hand, the money they received is a loan. Now, I'm all about free enterprise. As long as a company is privately owned then I don't really care what who's compensation looks like. And I can see how people would like to have top execs not be dipping too deeply into this new government provided windfall of cash. OK, I get that. But...... I also wonder how many of these companies really want to survive, and would like to hire in some big time "heavy hitters" to fill some upper positions to start turning things around. You aren't going to hire the kind of talent that may be required to turn a company around when you can only offer him a stipend compared to what he might currently be making. So, it could be seen as a good investment to bring in a guy at say a cool mil a year IF he can get the company back on it's feet so it can survive and repay the loan. Otherwise, you're stuck with the same poor managers and execs that drove the business into the ground in the first place. If that's the case, then all the bailout has done is delay the inevitable since nothing will change. Has anyone thought of that?

yup - which is why I thought we would be MUCH better off, instead of bailing out anything - using that same money to make NEW bank/companies/whatever with people who have actual interest in making it work - not just keeping the building standing long enough to run away. because it really feels like we are just throwing money into a buracracy pit - which has no actual usable outcome.

To be honest I’m pretty pissed Obama did this.

Think about it….he has just handcuffed these companies from being able to attract good people to help solve the problems these companies have.

Remember YOU and I are now majority stock holders in these companies. If they fail we loose OUR money.

All the other companies in the same field that don’t fall under this rule have a leg up on OUR companies. We are no longer on a level playing field.

I also think it is ridiculous what these guys are paid but I don’t want MY/OUR company to be set up to fail after we have invested so much money in them.

I don’t think anyone understands what the un-intended consciences of a move like this can be.

It’s a nice feel good gesture but you can’t make decisions just because they make people feel better. Especially in business.

These poorly run companies who put themselves in such a precarious position should have been allowed to crash and burn.

Yes it would have hurt. But in the long run it’s going to hurt way more later.

quote Originally posted by Bullet: To be honest I’m pretty pissed Obama did this. Think about it….he has just handcuffed these companies from being able to attract good people to help solve the problems these companies have. Remember YOU and I are now majority stock holders in these companies. If they fail we loose OUR money. All the other companies in the same field that don’t fall under this rule have a leg up on OUR companies. We are no longer on a level playing field. I also think it is ridiculous what these guys are paid but I don’t want MY/OUR company to be set up to fail after we have invested so much money in them. I don’t think anyone understands what the un-intended consciences of a move like this can be. It’s a nice feel good gesture but you can’t make decisions just because they make people feel better. Especially in business. These poorly run companies who put themselves in such a precarious position should have been allowed to crash and burn. Yes it would have hurt. But in the long run it’s going to hurt way more later.

yup - shoulda let them fail.

but - the one thing in the cap is: they can be paid in stocks - which means - there is a good incentive to make the stocks worthwhile.

how's about the people of america just suit them in a class action suit? wring them dry? is that even possible?

I see your point but these compnies aren't firing anyone anyway. They are keeping those same leaders anyway. One risk is the Ceo saying well, I'll just let her crash and burn and take my larger pay and retirement package rather than get bailout money and take a pay cut. Does the Ceo decide?

Most of the people are seeing the wrong problem. Obama and many others are pissed becaus the CEOs are taking large amounts of tax payers' money to pay for thier pensions, retirements, salaries, bonuses, etc. People are pissed that they are using public money to buy large boats and fancy vacations.

Obamas proposal is to cap the amount of money someone can make. (this is just wrong...people have the right to pursue happiness. Plus this would require larger governemnt with more rules and regulations....more people to pay to try to figure out how much public money they are taking)

My proposal is to never "bail" anyone or anything out. Why did we ever give public money to a private entity anyway?? (stop the bail-outs and our problems are solved)

It turns out this new rule is not retroactive. It will only apply to those companies that take taxpayer money going forward.

quote Originally posted by Bullet: To be honest I’m pretty pissed Obama did this. Think about it….he has just handcuffed these companies from being able to attract good people to help solve the problems these companies have.

I dunno... I kinda feel you shouldn't reward those that have failed... Maybe give bonuses (in the future) to execs that actually help their companies make a profit.

quote Originally posted by FieroRumor: I dunno... I kinda feel you shouldn't reward those that have failed... Maybe give bonuses (in the future) to execs that actually help their companies make a profit.

By bailing out the companies they have been rewarded, both the companies and the high paid idiots.

When you fail, you should fail, they are not being allowed to fail.

Failure is the first step to success.

quote Originally posted by Bullet: By bailing out the companies they have been rewarded, both the companies and the high paid idiots. When you fail, you should fail, they are not being allowed to fail. Failure is the first step to success.

It's at LEAST a way to figure out that what you just tried to do wasn't perhaps the best way to do it... ;rolleyes:
This bailout really doesn't seem like it's going to help much.

quote Originally posted by Red88FF: Steve, I gotta ask, in your mind does ANYBODY deserve to be a millionaire?

Executives who make their company money should be paid accordingly. If the company made millions they are worth a percentage. Not 2/3rds of the company profit.

If someone creates a company and it makes millions, or billions yes they deserve to be millionaires.
Like Bill Gates.

Just how many of these bank executives are Bill Gates?

Steve

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Technology is great when it works,
and one big pain in the ass when it doesn't.
Detroit iron rules all the rest are just toys.

quote Originally posted by FieroRumor: It's at LEAST a way to figure out that what you just tried to do wasn't perhaps the best way to do it... ;rolleyes: This bailout really doesn't seem like it's going to help much.

And in the end will we ever really know what if anything it did?

If things get better.
Bailout supporters will say it’s because of the bailout.
Bailout critics will say it would have gotten better anyway.

If it stays the same or gets worse.
Bailout supporters will say it would have been so much worse without the bailout.
Bailout critics the bailout didn’t work and even made things worse.

And who will be right? Nobody will ever really know!!!!!!!

quote Originally posted by Tony Kania: No matter what is posted about our President Obama, folks will never be happy with him. Crying shame too. America is pi$$ed about the bankers getting too much money. Then the President Obama haters are ticked that he is now the epitomy of socialism. I think that it is great that they are taking away the bankers (crooks) inflated salaries.

Tony, you start from an almost universal point: americans are angry about heads of failing banks getting too much money for that kind of performance.

I think many agree it needs to be addressed.

Your solution is to allow the government let the president unilaterally decide what is just compensation. You have decided that you trust ONE PERSON enough to give that person the SOLE AUTHORITY to shove the owner's of the company out of the right to make the decisions about the company THEY OWN, and would grant that person the power over the owners. You applaud the president taking over a private company.

Well, that is socialism. Since when did the government get granted the right to tell a private company what to do? I thought we were the land of the free. Well that "free" includes the freedom to over-pay the heads of the company.

Of COURSE if you believe in the constitution of the United States, you would be an "Obama hater". He takes an oath to uphold the constitution, and then violates it. Of COURSE I will never be happy with him. He is a socialist to his very core. He is going to enact socialist agendas. Those are against our constitution. IF by some miracle he acted against his nature and made different decisions, I would be happy with him during those times.


Now in this particular case, I have no problems making the CONDITIONS OF A LOAN from the government to a private company have contingencies like executive compensation. That doesn't violate their freedoms. They have the freedom to accept the loan under those terms.
So if THAT is what you meant, then I am happy with Obama, and that doesn't make him a socialist (he is one for other reasons.)


Diverging for a moment, why aren't you and Obama ticked about ATHLETES getting too much money? When are you going to start putting caps on their salaries? Do you really think Alex Rodriguez is worth $25 million per year? Maybe players on losing teams should be capped at $500,000?

What about actors? $10 million a movie? 20 million for a few? It's a stinking movie. Better put a cap on those. Especially if one bombs at the box office and loses money.

Wouldn't it be just as great to take away THEIR inflated salaries? Just trying to logically extrapolate your principles.

If you are going to ask for bail out money, I hope there are strings attached. If this means a cap in bonuses so be it. If you don't need the bail out, you should have as big of a bonus as what the share holders approve or you are able to negotiate. All is fair then.

Good luck finding quality CEOs now to turn those loser firms into profit centers again. Yeah, real smart move Mr. President.

quote Originally posted by Toddster: Good luck finding quality CEOs now to turn those loser firms into profit centers again. Yeah, real smart move Mr. President.

Todd you work for a percentage. Why shouldn’t these jerks? They are nothing but glorified paper pushers.

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Technology is great when it works,
and one big pain in the ass when it doesn't.
Detroit iron rules all the rest are just toys.

Once again, I am never going to consider myself as a Democrat, nor a Republican. I am an American. I do not have the answers. But to me, it seems as if the Republicans feel that they know everything. You can prove a Republican wrong, but he will never admit it. We would not be in such an economical turmoil, if we were not 1 trillion dollars in debt. Sorry, but true. We would not be in such turmoil, if Cheney and Rumsfeld didn't control the last administration. Bush is, and will be, one of the least powerful presidents that America has ever had. Cheney and Rumsfeld ran this country, and both worked under Nixon. We spend 10 billion a month in Iraq, while our kids go hungry.
I am not the one to blame for this. You are not the one to blame for this. Our elected officials are. Iran, and others hate America. I never did anything to harm them. Our elected officials have.
So, keep crying. Just get up and do something about it. Quit preaching negativity. Quit being a racist society. I grew up poor and white in the heart of Detroit. I have witnessed racism on both sides of the track. My pops beat my mom. Mom popped pills. I have lived in my van, in the dead of winter. I have not eaten for over a week before. You know what. Now I eat steak whenever I want. I eat crab whenever I want. I buy whatever I want. I own a home in a great neighborhood. My mortgage is silly low, because I put a ton down. I worked my a$$ of for it. No gooberment agency helped. I did not take food stamps. I never stayed one night in a government cot. I have my house wired into my computer. I see all. I keep weapons within easy reach. I own all 5 of my cars. No loan. I am not the guy taking out a loan, knowing that he will never pay off. I am not the bank, lending to folks that are dead broke.
My point is this, take accountability for your own actions. Quit crying the sky is falling. Stop blaming others. Just frickin do something about your crisis. Stop, for a moment, and wash out your vagina.

quote Originally posted by Toddster: Good luck finding quality CEOs now to turn those loser firms into profit centers again. Yeah, real smart move Mr. President.

You will always find talented people who want the challenge to turn a company around. All to often these potential CEOs come into the position with a contract that gives them good money plus perks, just to walk in the door. They have in their contract the golden parachute to grant them a benefits even when their management decisions do not produce positive results. They manage these companies to failure, then still walk away with all too much money. If they base their salaries on stock performance, they will work to raise stock prices only and not necessarily to manage the company for growth. Stock price is, in many instances, is based on faith, rather than performance.

I saw that while I worked at Eastman Kodak. The BOD forced out Kay Whitmore and hired George Fisher. The stock price increased rapidly, just because of his reputation, and George looked like a savior. After about a year, the stock hit an all time high (in recent history) to about $90/share and George cashed out his options from what he got for taking over the company. He made millions. He "retired" and the stock started its downard spiral and no matter who took over the stock kept dropping and each new CEO got a great package, cashed out taking a bunch of money (golden parachute) with no turn around with the company. The only thing EK has done is to layoff people and imploding buildings in the complex in Rochester NY. The stock is down to below $5/share, employment at EK in Rochester is 87% less than it was in 1982 with another round of layoffs coming, and the company still cannot show a profit. The current CEO Antonio Perez is about to be removed, and he'll walk with a bunch of $$.

My rant on corporate philosophy.

quote Originally posted by Toddster: Good luck finding quality CEOs now to turn those loser firms into profit centers again. Yeah, real smart move Mr. President.

again - they can be paid in stocks - if they actually can make anything happen - they will get theirs.

and - most importantly - we can clearly see that pay does not equal quality CEOs. In fact - it seems quite the opposite now, doesnt it?

quote Originally posted by Tony Kania: Once again, I am never going to consider myself as a Democrat, nor a Republican... We would not be in such an economical turmoil, if we were not 1 trillion dollars in debt. Sorry, but true. .

We will find out if that is true as almost a trillion dollars are sent into our economy where this administration thinks it should go.

I consider my self American as well, as far as voting I do it on issues that matter to me.

Not that this will be popular opinion:

Salaries ( and prices for goods ) are market driven. If they are able to negotiate that salary + a parachute, then apparently at the time the market supported it or they wouldn't have been able to negotiate it. That said, today the market wouldn't support those sorts of contracts, but they made them while it would, so it should still be held valid. If you start canceling contracts 'just because things turned south' then they are pretty much worthless in all areas. ( however, a CEO with some morals would renegotiate, but there is no law that says they have to be moral, its a legally binding contract, on both sides )

The market should regulate salaries, not the government. Letting the government restrict peoples salaries is a "bad thing" (tm), and is a scary precedent.

They should have restricted it themselves, but they were too ignorant, stubborn and crooked to do it.

How many of those bankers have done anything like what Bill Gates is doing?

Bill Gates Unleashes Swarm of Mosquitoes on Crowd
Microsoft founder turned philanthropist Bill Gates released a glass full of mosquitoes at an elite technology conference to make a point about the deadly disease malaria.
"Malaria is spread by mosquitoes," Gates said while opening a jar onstage at the Technology, Entertainment, Design Conference — a gathering known to attract technology kings, politicians, and Hollywood stars.
"I brought some. Here I'll let them roam around. There is no reason only poor people should be infected."
First reported on social networking site Twitter, Facebook's Senior Platform Manager Dave Morin blogged, "Bill Gates just released mosquitos into the audience at TED."
Gates then waited a minute or so before assuring the audience the freed insects were malaria-free.
The unusual presentation on malaria prevention was confirmed by the Bill and Melinda Gates Foundation's media office. A spokesman said the insects released were not carrying malaria.
Gates retired as head of Microsoft last year to focus more on his foundation. One of its key projects is ending malaria and it has spent millions on fighting the disease.
The philanthropist has been pushing to reduce malaria deaths through the nonprofit. In September, Gates announced that the Bill and Melinda Gates Foundation would provide $168.7 million to the PATH Malaria Vaccine Initiative to help develop a vaccine for the deadly disease.

http://www.foxnews.com/story/0,2933,488348,00.html

If they make the company money they deserve a share in the profits. If not they deserve a boot right up the ass.

So anyone else want to say executives need those million dollar bonuses when they make the company lose money?

Oh ya and the market doesn’t regulate CEO’s salaries. Their blow buddies on the board of directors do.

Steve

------------------
Technology is great when it works,
and one big pain in the ass when it doesn't.
Detroit iron rules all the rest are just toys.

quote Originally posted by 2.5: They should have restricted it themselves, but they were too ignorant, stubborn and crooked to do it.

Oh, i agree on that part ( the crooked part ). if i was in their position id have reduced my pay and parachute to keep my job and help save the company, but there isn't normally any legally binding rules to force them to do the 'right thing'.

Problem is few CEO's today built the company they oversee, so they really don't care.

They should be canned for doing the wrong thing.

quote Originally posted by 2.5: They should be canned for doing the wrong thing.

yeah - and I am still thinking class action lawsuits.....

see a buncha highly paid, supposedly educated, executives standing around shrugging their shoulders saying "...I dunno...I do not recall...."

quote Originally posted by Pyrthian: again - they can be paid in stocks - if they actually can make anything happen - they will get theirs. and - most importantly - we can clearly see that pay does not equal quality CEOs. In fact - it seems quite the opposite now, doesnt it?

And if they don't WANT to be paid in stock? They have kids to put through college too. They need financial security. Why would anyone worth his salt NOT negotiate the best pay he can get?

Sorry Gents. No sale.

And as for the "percentage" I get paid, that is negotiated too. For some people and deals I will for 1%. For others, 10%. I reserve the right to walk from any opportunity if the pay doesn't suit my sense of reasonable compensation for the work effort I will expend. So why should a CEO be any different?

I know this petty and irresponsible move by Obama satisfies the masses. Cut down 'dem tall poppies! But it destroys the free market concept. I ALONE decide what I am worth, not you! If the corporate owners of some companies are stupid enough to pay a fortune to an incompetent CEO then that is the gamble they take as investors. They could vote him off the board or sell their stock. When I buy stock the first thing I do is check out the managment. If I am not satisfied then I don't buy.

Like I said, good luck finding quality CEO until this changes.

quote Originally posted by Toddster: And if they don't WANT to be paid in stock? They have kids to put through college too. They need financial security. Why would anyone worth his salt NOT negotiate the best pay he can get? Sorry Gents. No sale. And as for the "percentage" I get paid, that is negotiated too. For some people and deals I will for 1%. For others, 10%. I reserve the right to walk from any opportunity if the pay doesn't suit my sense of reasonable compensation for the work effort I will expend. So why should a CEO be any different? I know this petty and irresponsible move by Obama satisfies the masses. Cut down 'dem tall poppies! But it destroys the free market concept. I ALONE decide what I am worth, not you! If the corporate owners of some companies are stupid enough to pay a fortune to an incompetent CEO then that is the gamble they take as investors. They could vote him off the board or sell their stock. When I buy stock the first thing I do is check out the managment. If I am not satisfied then I don't buy. Like I said, good luck finding quality CEO until this changes.

well - either way - so what? current history clearly shows that pay & quality CEOs are NOT in ANY WAY associated.