Bailouts and Paycaps: Two Opinions

2/4/2009

This morning, President Obama will be mandating paycaps for CEO's who are taking bailout money. Obama told CNN the other day that these companies have "...got responsibilities not to live high on the hog..."

Opinion One

What a great move! Why in the world should a failing bank who are taking loans from the government be paying their top level executives more per year than the President of the United States of America? It seems only right that if they need bailouts and loans that they shouldn't be riding around in luxury and taking big salaries when the people who work for them are having their jobs cuts out from under them.

How can they sleep at night taking millions of dollars from a company that is bordering on bankruptcy? Where are their ethics?

It's about time Obama stepped in and curbed their greed.*

*note, this only applies to banks and corporations taking government funds- the rest of the businesses that are able to remain financially viable can pay whatever they want to their CEO (and rightfully so, for when you make money without federal assistance no one should tell you what to do).

Opinion Two

Does President Obama want to ruin these companies?!

Doesn't he understand that the companies who need to attract the best and brightest talent are the ones who are on the brink of failure? It's hard enough to recruit top leadership for a failing venture without salary caps- but who in their right mind is going to want to jump on a sinking ship and turn things around for little to no financial reward?

It's ludicrous to expect these businesses to be able to retain the sort of leadership they need for such a small amount of money.

Yes, it's true that $500,000 seems like a lot of money to those of us who won't make that over the course of the next 10 years, but in the CEO world that's nothing. It's almost an insult.

This is the worst move possible because it squashes the ability of these companies to recruit good leadership. In the end, bad leadership will ruin these companies faster than spending a few million on visionaries who have what it takes to make these companies profitable again.

What do YOU think?
1. If companies are taking public funds, should they place paycaps on their executive team?2. Does the President even have the right to impose paycaps?3. Do paycaps make things fair, or will they make it harder to become financially viable?

beth

2/3/2009 11:57:05 pm

surely, for $400,000-$500,000 you can find someone smart enough to figure out the problem. right? maybe someone younger that is very bright and doesn't necessarily think they are worth more money per year than the president.

Gabe link

2/4/2009 12:02:24 am

My opinion is that it is a great idea. At the same time these guys are looking at huge pay cuts with not a huge effect on their quality of life. If the CEO's of the 3 biggest auto companies in the country can work for a year for a penny, imagine how much money the CEO's of banks make. Its is going to hurt, yes going from anywhere around $50,000,000-$100,000,000 to around $500,000 is going to hurt their kids trust funds, they may have postpone the purchase of their 2010 Murcielago, but these guys' lives are not going to change. Its a good idea, but its simply a statement. Not to mention Salary caps in the US only apply to SALARIES. Bonuses and Commissions are not covered by that umbrella. Thats why baseball players ofter make more than the MLB salary cap.

These companies are not going anywhere. If these guys were to quit their jobs, they would look like greedy cowards. Not only are they going to take their pay cut, they will like it and they will flaunt it and once one of them does it, they will all do it.

In my opinion, the president has the right to do whatever he wants, it may not be correct, but hey we elected him and we take him out of office if we so choose.

Gabe link

2/4/2009 12:05:46 am

Just to give you an idea, the president of First National Bank in Osceola county makes $4.6 million/year. The heads of big banks make lots of money.

Keith Milsark

2/4/2009 02:27:14 am

I have mixed emotions on this. On the one hand, it does seem that failing companies who are getting bailed out by the taxpayers should have the responsibility to use those funds wisely, and limited executive pay would be a good move. On the other hand, once the government does that, where does it end? What about attorneys who are in private practice, but consult for these companies? Does the government have the right to tell them how much they can make, even though they're not employees? We all know that once government takes power, it never gives it up. How long will it be before some bureaucrat is deciding how much doctors should be paid? Or store owners? Or web designers? I'm concerned about the precedent this sets. I can just see some Democratic congressman deciding that pro football players should be limited to a certain amount, or musicians, or authors. From there it's a short step to telling a high school senior, "We need more auto mechanics, so that's what you're going to be."

As Cat Stevens said many years ago, "Will you tell us when to live? Will you tell us when to die?" How much freedom are we willing to give up?

Gabe link

2/5/2009 12:06:41 am

The NFL is not asking for Government handouts. This sets a precedent that says, "hey, we can help, but you have to work with us." I don't think this is a "give an inch, take a mile" situation.

John Kepler Lewis

2/8/2009 09:22:01 pm

The inherent problem with this plan is that it is just more government encroaching into private industry, thus continuing our steadfast march into fascism. As evidenced by some of your previous replies, this is a simple case of wealth envy, that in reality means absolutely nothing in the long run. These paycaps say nothing of stock options, corporate benefits or other compensations that will push executives salaries back into the 8 figure range.

Good for them. If they are failing as a CEO, let the boards of directors and the voting shareholders kick them out.

If one particular business is in good enough with government representatives to get a handout from them, congratulations, we've already been had as a nation, who cares how they spend it?

Comments are closed.

Don't Panic

Bailouts and Paycaps: Two Opinions

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