By Brian Beutler
Looks like Barack Obama will take meaningful steps to limit compensation for bailed out executives after all–though as I understand it, the caps will not be retroactive. They’ll apply only to banks that take bailout money going forward. So much for this post, I guess.
But check out this bit from the Times article:
“That is pretty draconian — $500,000 is not a lot of money, particularly if there is no bonus,” said James F. Reda, founder and managing director of James F. Reda & Associates, a compensation consulting firm. “And you know these companies that are in trouble are not going to pay much of an annual dividend.”
Mr. Reda said only a handful of big companies pay chief executives and other senior executives $500,000 or less in total compensation. He said such limits will make it hard for the companies to recruit and keep executives, most of whom could earn more money at other firms. [Emphasis mine]
Nowhere is it assumed, of course, that a bank executive who rendered a multibillion dollar a year enterprise worthless might have a hard time finding work in the industry. And while this might all be bluster (if the banking crisis continues, there just won’t be that many places where executives are allowed to earn a ton of money) it might just also be true. After all, these limits certainly wouldn’t exist if the administration didn’t impose them, and there’s a lot at stake for these people in preserving the illusion that they didn’t mismanage their firms or do anything else wrong.
As if you needed any reminder that these salaries and bonuses have nothing to do with performance.
Anyhow, if there’s anybody out there who deserves a fraction of the compensation the Robert Rubin’s of the world are making today, then maybe it’s the guy who takes over for the executive who’s rather quit than make a paltry $500,000 a year and then, on that salary, pulls his company out of the ditch. Not the guy who landed it in the ditch in the first place. The fact that the government still blanches at the idea of taking control of these firms away from the people who think half a million dollars a year of taxpayer money isn’t enough should really shit you off.