President Obama and Treasury Secretary Tim Geithner have announced a $500,000 maximum wage for employees of companies that receive taxpayer support. The rule will only apply to companies that receive future bailout funds. Oh, also, you’re going to be bailing out more companies.
In his remarks, President Obama attacked “executives being rewarded by failure,” and argued excessive severance packages and bonuses for companies receiving federal money were in “bad taste.” Bailed out companies will be required to disclose and justify perks and bonuses to taxpayers.
Responding to Obama’s plan to “take the air out of their golden parachutes,” a business consultant said:
“That is pretty draconian — $500,000 is not a lot of money, particularly if there is no bonus. And you know these companies that are in trouble are not going to pay much of an annual dividend.”
That’s rough.
U.S. Plans $500,000 Cap on Executive Pay in Bailouts [NYT]
(Photo: Public Citizen)
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I love it. The tax cheat, Geithner, will be taking control now. Only in America.
I have serious doubts that executive compensation would have gotten so far out of hand if the boards of directors weren’t made up of other CEOs looking for the same kinds of salaries…
I’m waiting some smart lawyer to argue for a private aircraft, car and driver, security, and living expenses not to be included. After all, the President get those perks.
@Major-General: It’s multiple private aircraft. He has a modified 747, and a VH-71 helicopter (that costs over $1B alone), among others in the Presidential Airlift Group.
$500k is still way more than the average Joe or Jane makes in a year and much more than many make in a lifetime! If the vast majority of Americans have to cut back why not these overpaid CEOs? Why are we as Americans footing the bill for their lavish lifestyles while our seniors struggle to pay for their prescriptions, the average family pinches pennies to support their children and singles battle to take care of elderly parents? The president of the US doesn’t make this much, why should these clowns who drove companies into the ground be paid this? That number should have been cut even more!
Have we lost our minds? This is just going to drive the good executive talent to companies that compete with the organizations accepting federal bailout monies.
To paraphrase a quote I heard today, the government subsidizes the part of the economy that isn’t performing, and the part of the economy not performing needs the money so it can continue to fail.
It’s important for the federal government to help regulate the economy, but is corporate bailout really the right way. Of course, I hope we don’t end up with Hoovervilles again.
1st – bailouts are not constitutional; 2nd – if we the people, our taxes, are funding bailouts, then CEOs, CFOs and other officers must have their compensation limited to no more than 500K (an arbitrary value picked by arbitrary people); and lastly if we are serious about the state of the union, then for each company that “failed” a real investigation should be conducted to determine if any illegal activity took place and then hold them accountable to the full extent of the law – which is an infrastructure our taxes already pay for.
This is not only useless but, it’s also a HUGE violation of the constitutional limits on the authority of the federal government. This is not Obama’s desire for fairness at hand here. It’s more about setting a precedent whereby he will want to limit EVERYONE’S pay. Don’t doubt me. Obama is a socialist. He has no respect for the private sector or the Constitution that he took an oath to defend.
@kreatre2009: What’s the matter…slow day at Free Republic? Didn’t Nixon institute wage freezes back in the 70s?
Don’t worry greed and favoritism will win out in the end.