T Nation

Salary Caps

Ok I’m sure most of you have heard about the proposed salary caps on guys who run corporation’s that are going to get bailout money. If I’m not mistaken the idea behind it is that they make too much and the company still fails. Well, our government sucks an they constantly fail and screw up yet they get to vote themselves pay RAISES. Isnt somthing about that just backwards???

Yes, it is absolutely backwards.

The cap is proposed to be $500K and applies only to the bailed-out banks. The effect will be to exclude the most qualified CEOs from being hired. These legislating idiots do not even realize that at this time these banks want to attract and keep the most qualified people they can. They will not do this by offering a “pittance”.

Why is the government managing our banks?!

How about salary caps for congress when they screw up.

By the way $500K is not a big comp package for Wall St. guys if you are good at what you do.

[quote]hedo wrote:
How about salary caps for congress when they screw up.

By the way $500K is not a big comp package for Wall St. guys if you are good at what you do.[/quote]

Exactly, they want to cap everyone else’s salary. what happens when all these caps reduce the taxes brought in locally, state, and nationally. Bloomberg is already pissing and moaning about it.

They are getting Federal money because they fucked up so badly that it’s caused a world recession.

And some of the places, after they got the money, had parties worth hundreds of thousands of dollars and I read somewhere one of them was going to buy a damn private plane.

These CEOs make something like 247 times the amount that workers make. They made that much so they could fuck up and destroy everything. I’m not seeing how a cap is a bad thing. You fuck up, you don’t get your way anymore.

I say good.

How about caps for the hollywood execs who wanted a bailout?

If they got the money should they be capped also?

Actually, here is my take. I don’t agree with the proposed salary caps, but I am not against freezing their salaries and denying bonuses.

Here is my reasoning:

  1. You accepted a lot of money from an outside source, I.E. the gubernet. By this very act you have there by forfeited your right to pure autonomy when it comes to making decisions on anything. Gifts come with strings. The government bought a say in their business.

The company could choose not to accept the bailout, so they can tell the government to butt out. They danced with the devil and the devil won…This is the corporation’s fault they got themselves into this position and they accepted a hand out which make you beholden to your donor.

  1. If you are billions of dollars in the red, your company is on the verge of bankruptcy, you don’t deserve a bonus. A bonus is for a job well done, you didn’t do a good job if you company is on the teetering edge of total collapse. What is sad is some of these cocksuckers can’t think they deserve a bonus.

  2. This money is to help the fucking company, not to make these colon-lickers even richer. The should voluntarily take a pay cut and send a public apology to the all of the company for fucking up the business. They should also sell their luxuries like the private jets before they start slashing jobs.

The only reason I am not for slashing their base salaries to $500,000 is that the other employees can very easily get their salaries slashed…I don’t want to set that precedence.

[quote]pat wrote:
Actually, here is my take. I don’t agree with the proposed salary caps, but I am not against freezing their salaries and denying bonuses.

Here is my reasoning:

  1. You accepted a lot of money from an outside source, I.E. the gubernet. By this very act you have there by forfeited your right to pure autonomy when it comes to making decisions on anything. Gifts come with strings. The government bought a say in their business.

The company could choose not to accept the bailout, so they can tell the government to butt out. They danced with the devil and the devil won…This is the corporation’s fault they got themselves into this position and they accepted a hand out which make you beholden to your donor.

  1. If you are billions of dollars in the red, your company is on the verge of bankruptcy, you don’t deserve a bonus. A bonus is for a job well done, you didn’t do a good job if you company is on the teetering edge of total collapse. What is sad is some of these cocksuckers can’t think they deserve a bonus.

  2. This money is to help the fucking company, not to make these colon-lickers even richer. The should voluntarily take a pay cut and send a public apology to the all of the company for fucking up the business. They should also sell their luxuries like the private jets before they start slashing jobs.

The only reason I am not for slashing their base salaries to $500,000 is that the other employees can very easily get their salaries slashed…I don’t want to set that precedence. [/quote]

All makes sense. I just find it amusing that guys like Bloomberg are whining about reduced tax revenue. Corporate bonuses are down something like 43% this year overall. Which is reduing the NYC tax revenue.

Funny part, I’ve heard this whine before about high executive salaries, but no one thinks their salary is to high. John Stossel talked to a union leader who made 250K a year. He asked him if his was to high? He didn’t think so.

Everyone wants as much as they can get and in a free market, it’s okay by me if they get whatever.

I just don’t like giving or getting a bonus if you’re running in the red. Especially if you need mom and dad to help out.

Let’s say your kid needs rent money, you give him the money, but he takes off to Florida for spring break. You’d rightfully be pissed off.

But if the company is bad off, everyone should take a cut, even the regular joe. I worked a summer factory job in 1984 and made 9 + an hour. business was slow in that regards and next summer I got 8+ an hour. I was just glad to have a good summer job, so I didn’t care.

But workers need to know that they are there to work. They don’t DESERVE a job or OWN the company. They work to make money for the people who own the business. In turn they get paid for their time.

In my factory job I learned it in one day. You can teach someone in one day to do a job, they are by nature very expendable.

Some CPA in charge of some division is less expendable. CEOs are often even less for a variety of reasons. It doesn’t mean they are 100% safe, and they will always do well for the company. Just that they have a very special skill set.

I own my own office. I can do the billing in my office, talk to insurance companies, and deal with the public better than anyone in there. The office won’t run without me.

But I don’t take fancy trips, throw big parties, and do other silly ass stuff when I’m broke. that’s just stupid.

[quote]pat wrote:
Actually, here is my take. I don’t agree with the proposed salary caps, but I am not against freezing their salaries and denying bonuses.

Here is my reasoning:

  1. You accepted a lot of money from an outside source, I.E. the gubernet. By this very act you have there by forfeited your right to pure autonomy when it comes to making decisions on anything. Gifts come with strings. The government bought a say in their business.

The company could choose not to accept the bailout, so they can tell the government to butt out. They danced with the devil and the devil won…This is the corporation’s fault they got themselves into this position and they accepted a hand out which make you beholden to your donor.

  1. If you are billions of dollars in the red, your company is on the verge of bankruptcy, you don’t deserve a bonus. A bonus is for a job well done, you didn’t do a good job if you company is on the teetering edge of total collapse. What is sad is some of these cocksuckers can’t think they deserve a bonus.

  2. This money is to help the fucking company, not to make these colon-lickers even richer. The should voluntarily take a pay cut and send a public apology to the all of the company for fucking up the business. They should also sell their luxuries like the private jets before they start slashing jobs.

The only reason I am not for slashing their base salaries to $500,000 is that the other employees can very easily get their salaries slashed…I don’t want to set that precedence. [/quote]

we’re fucked.

The fact of the matter is that only the market can set wages and any attempt to mess with them will have consequences.

We either:

a) accept that the best people are not going to be hired for particular jobs because salary caps keep certain people from being employed or

b) accept that our money is gone anyway and no amount of regulation will change that.

[quote]FightinIrish26 wrote:
They are getting Federal money because they fucked up so badly that it’s caused a world recession.

And some of the places, after they got the money, had parties worth hundreds of thousands of dollars and I read somewhere one of them was going to buy a damn private plane.

These CEOs make something like 247 times the amount that workers make. They made that much so they could fuck up and destroy everything. I’m not seeing how a cap is a bad thing. You fuck up, you don’t get your way anymore.

I say good. [/quote]

Then I guess you will be good when the Government comes in and tells you what to make, how to make it, and how much you get for it huh?

You compare their salary to “workers”? You cannot compare an executive who makes decisions and makes policies that drive company profits to a desk clerk who files deposits. Yeah they failed…but you are putting a noose around the job that will kill any type of “progressive” thinking…to use a word you may like.

The Socialist/Communist playbook has been bought by you hook line and sinker.

[quote]FightinIrish26 wrote:
They are getting Federal money because they fucked up so badly that it’s caused a world recession.

[/quote]
If you mean forcing them through Government prosecution via Janet Reno to provide loans to any schmoe…and especially minority schmoes without credit or jobs…then yes, they fucked up.

The banks should have told THE AG to fuck off in the Clinton term.

this make about as much sense and them bailing these guys out. So let me get this straight…You “invest” a trillion dollars in companies that no one in the private sector would throw money at. You them force them to offer uncompetitve salaries that will surely lead to second rate CEOs. Not quite the investment stratagy I would use.

Capping salaries of CEOs makes about as much sense as capping (by breaking contract) a sports star for the poor performance of their team for a season, or even a game. About as much sense as capping a director or actor’s salary for making a bad movie. In either case, what do you think the outcome would be?

People need to fucking think through this a bit. I know it’s easy to say fuckem’ they make too much. How about just a little bit of reason and logic here?

Quit thinking of your, and your childeren’s, money given to them as a bailout. It is now an ivestment. If you ever hope to get any return out of this, and you don’t want to bail them out again, they will need to attract the very best people available. 500k will not do this. Eliminating golden parachutes will not do this. Paying on performance will not do this. Like it or not the market is paying these types of salaries to high profile CEOs. You have to pay to play.

A cap should be placed on banks where OUR tax dollars are being used to bail them out. Why should we continue to pay for their poor decisions? I know that it may sound socialistic (and I am the LAST one who wants that) but I can’t see these guys getting huge amounts of money for losing ours.

How much money did you lose from this crisis so far??? Some of us are out tens of thousands, some more, more less.

And what would happen to most workers who made crucial errors in the field? Would they get millions of dollars in their bonus or would they get canned?

Capitalism relies on fair market value; not what one indiviudal thinks (as in these execs and their boards of directors). And fair market value for employees is based on performance. And as an analogy who would pay $20 million a year to a pitcher who could not throw strikes all year??

But either way all of these ‘stimulus’ programs are funded by those of us working and paying taxes. So we should all care what happens to that money.

[quote]Dr_Razor wrote:
A cap should be placed on banks where OUR tax dollars are being used to bail them out. Why should we continue to pay for their poor decisions? I know that it may sound socialistic (and I am the LAST one who wants that) but I can’t see these guys getting huge amounts of money for losing ours.

How much money did you lose from this crisis so far??? Some of us are out tens of thousands, some more, more less.

And what would happen to most workers who made crucial errors in the field? Would they get millions of dollars in their bonus or would they get canned?

Capitalism relies on fair market value; not what one indiviudal thinks (as in these execs and their boards of directors). And fair market value for employees is based on performance. And as an analogy who would pay $20 million a year to a pitcher who could not throw strikes all year??

But either way all of these ‘stimulus’ programs are funded by those of us working and paying taxes. So we should all care what happens to that money.[/quote]
How do you know another CEO willing to come to one of these companies wouldn’t be worse? Especially in a capped salary position. They will not be able to compete for qualified CEOs.

Capping salaries is the same as price fixing. We know all to well what price fixing does. If you set price caps, it creates shortages. Nothing different about labor.

[quote]dhickey wrote:
this make about as much sense and them bailing these guys out. So let me get this straight…You “invest” a trillion dollars in companies that no one in the private sector would throw money at. You them force them to offer uncompetitve salaries that will surely lead to second rate CEOs. Not quite the investment stratagy I would use.

Capping salaries of CEOs makes about as much sense as capping (by breaking contract) a sports star for the poor performance of their team for a season, or even a game. About as much sense as capping a director or actor’s salary for making a bad movie. In either case, what do you think the outcome would be?

People need to fucking think through this a bit. I know it’s easy to say fuckem’ they make too much. How about just a little bit of reason and logic here?

Quit thinking of your, and your childeren’s, money given to them as a bailout. It is now an ivestment. If you ever hope to get any return out of this, and you don’t want to bail them out again, they will need to attract the very best people available. 500k will not do this. Eliminating golden parachutes will not do this. Paying on performance will not do this. Like it or not the market is paying these types of salaries to high profile CEOs. You have to pay to play.
[/quote]

That’s all fine and dandy, but they asked for the government intervention because they are idiots who fucked up. So government intervention is what they got. Usually, I am totally against government intrusion, but if you invite the bull into the china shop, what happens next is your fault.

Besides it doesn’t take genius to run a company in the ground. Hell, I could do that for $250,000…That’s easy money right there.

[quote]pat wrote:

That’s all fine and dandy, but they asked for the government intervention because they are idiots who fucked up. So government intervention is what they got. Usually, I am totally against governement intrusion, but if you invite the bull into the china shop, what happens next is your fault.[/quote]

So now you want gov’t to do something that make absolutly no economical sense? Again?

If you want return on you investment, this is not a good policy. Plain and simple.

[quote]Dr_Razor wrote:
A cap should be placed on banks where OUR tax dollars are being used to bail them out. Why should we continue to pay for their poor decisions? I know that it may sound socialistic (and I am the LAST one who wants that) but I can’t see these guys getting huge amounts of money for losing ours.

How much money did you lose from this crisis so far??? Some of us are out tens of thousands, some more, more less.

And what would happen to most workers who made crucial errors in the field? Would they get millions of dollars in their bonus or would they get canned?

Capitalism relies on fair market value; not what one indiviudal thinks (as in these execs and their boards of directors). And fair market value for employees is based on performance. And as an analogy who would pay $20 million a year to a pitcher who could not throw strikes all year??

But either way all of these ‘stimulus’ programs are funded by those of us working and paying taxes. So we should all care what happens to that money.[/quote]

You’re completely wrong.

There is no such thing as a “fair” market price. Prices are set voluntarily in the market by supply and demand. The market price is the only price.

The fact of the matter is that wages might have come down if it were not for the bailout in the first place. Now that all that money is sitting in these bank coffers no decent, aspiring CEO is going to take the reins of a “failed” bank knowing that he has a monumental task of fixing it ahead of him.

That is the bed we made with these bailouts, now we have to lie in it – either that or watch the banks disappear – which I think all failed banks should do anyway.

[quote]LIFTICVSMAXIMVS wrote:

The fact of the matter is that wages might have come down if it were not for the bailout in the first place. Now that all that money is sitting in these bank coffers no decent, aspiring CEO is going to take the reins of a “failed” bank knowing that he has a monumental task of fixing it ahead of him.
[/quote]
it’s a bit more depressing than this. had we not bailed them out, they would have been bought up by companies with CEOs that didn’t drive their companies to ruin. Instead, we let the inefficient companies keep resources that could have been better used by efficient companies. Then you look at what these inefficient companies are doing. Buying up and taking over smaller more efficient companies.

We paid a trillion dollars to make our banking sector less efficient.

If you are at all interested in economics, this is an incredible time to be alive in this country. The economic decisions made in the last year or so are historic and will be talked about and analyzed for centuries.

[quote]dhickey wrote:
LIFTICVSMAXIMVS wrote:

The fact of the matter is that wages might have come down if it were not for the bailout in the first place. Now that all that money is sitting in these bank coffers no decent, aspiring CEO is going to take the reins of a “failed” bank knowing that he has a monumental task of fixing it ahead of him.

it’s a bit more depressing than this. had we not bailed them out, they would have been bought up by companies with CEOs that didn’t drive their companies to ruin. Instead, we let the inefficient companies keep resources that could have been better used by efficient companies. Then you look at what these inefficient companies are doing. Buying up and taking over smaller more efficient companies.

We paid a trillion dollars to make our banking sector less efficient.

If you are at all interested in economics, this is an incredible time to be alive in this country. The economic decisions made in the last year or so are historic and will be talked about and analyzed for centuries.

[/quote]
excellent analysis!

How many game theorists did you have to consult to figure this out?

:wink:

Capping salaries is a mistake and counter productive for many good reasons however I am not surprised by this move from socialist Obama.

Bailed out banks continuing to pay bonuses is scandalous and wrong, there should be no bonus payments to any employee of any bailed out bank and yet we see it happening. Tax payers money being used to pay bonuses - one bank which received government money in the UK justified paying bonus by saying that the sums are coming from previously allocated bonus funds and not the bailout money… shit well thats ok then…right? Or that it’s the only way to keep talented people… incase the banks hadn’t noticed nobody is hiring at the moment so where are all these talented people who will suddenly be leaving in their droves if no bonuses are paid going to find work? Banks cannot get rid of employees fast enough at the moment it really does just give another great example of the culture of greed and self importance evident in the banking sector the same motivation and culture which has driven us to global meltdown. Freezing all bonuses, pay rises and performance related benefits should be a mandatory government stipulation on bailed out banks.

Whilst we are on the subject why are bankers and Wall Street types paid so much for what they do? Clearly their performance is a function of the market - they are not the super heros they made us believe and many of them are plain average.

What is it that they do that is so special to justify their hyper inflated salaries and bonuses? Where is their risk?

I am all for people making good money when they have earned it… bankers I just don’t see the justification.