Wednesday, February 4, 2009

Let them eat....a pretty expensive cake

Executive pay on Wall Street has gotten out of hand. Millions and millions going out for decisions that have threatened to turn us into the world pictured in Mad Max, but without all the nice frills. So President Obama is stepping in and saying enough! You executives want government money? You'll have to cut your caviar baths back to one a week.
Call it the maximum wage. President Barack Obama wants to impose a $500,000 pay cap on executives whose firms receive government financial rescue funds, a dramatic intervention into corporate governance in the midst of financial crisis.

The new restrictions, described by an administration official familiar with the new rules, are to be announced Wednesday morning at the White House. The steps set the stage for the administration's unveiling next week of a new framework for spending the money that remains in the $700 billion financial rescue fund.

"If the taxpayers are helping you, then you've got certain responsibilities to not be living high on the hog," President Barack Obama said Tuesday.
That's right, you'll have to live sort of hunched over, riding a tad lower on the hog. Still pretty high, but not at the hog's highest point. $500,000. America's top executives now reduced to being paid like backup defensive ends and shortstops who hit .230. Now even by government standards this is an incredibly weak measure. It applies only to companies taking "exceptional assistance" which will probably be defined so high as to affect no one. Banks that are getting assistance but are considered healthy can decide to opt out....but only if they disclose their compensation structure and put it up to the stockholders for.....a nonbinding vote. Ouch, nonbinding votes, the harshest rebuke in current contemporary society. At least according to the Obama Administration.

The other proposals include requiring executives to hold their stock options for years before cashing out, giving shareholders lots more nonbinding votes on pay restrictions and hilariously calling them "say on pay" votes, and making executives attend a conference on executive compensation. Odds that these executive will fly into the conference on moderation in their million dollar private jets and stay at five star hotels: 1-1. But I'm sure they'll learn something. So look out corporate America, if you want taxpayer bailouts you better be ready to stay in a tax bracket higher than 99% of Americans and suffer the wrath of nonbinding votes! No free pie and cake either. OK, a small slice.

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