Obama Devising Ways To Limit Executive Pay

[FourScore]

Source: HuffingtonPost

The Obama administration is tackling the bailout of the battered financial sector on two tracks: overhauling how the government spends the money while devising new executive compensation restrictions for banks that get it...

...The Treasury Department is expected to announce new rules that limit executive pay for companies that receive "exceptional assistance" under the bailout program.

Obama reacted angrily last week to reports that banks gave more than $18 billion of bonuses at a time when they were relying on taxpayer money for their survival.

Administration officials say rules under consideration would prohibit institutions receiving "exceptional assistance" from giving severance payments to their top 55 executives. Their bonus pools would be reduced by about 40 percent from the 2007 level. Such companies would include Citigroup Inc., insurance giant American International Group Inc. and automakers General Motors Corp. and Chrysler LLC, all of whom received bailouts under the Bush administration...

Read more: http://www.huffingtonpost.com/2009/02/03/obama-devising-ways-to-li_n_163431.html

[ComtesseDeSpair]

1. Bonus Pool "Reduced"????

What about ELIMINATED ALTOGETHER?? My company isn't giving out bonuses and we're doing relatively well in this economy. How dare these companies give out bonuses with taxpayer money!

[whosinpower]

2. I agree

Any bank that needs bailout money is in no position to for its management to qualify for ANY bonuses until the full amount of taxpayer dollars is repaid to the government - in full - with interest.

[Lorien]

3. I like McCaskill's plan much better:

WASHINGTON (CNN) -- One day after President Obama ripped Wall Street executives for their "shameful" decision to hand out $18 billion in bonuses in 2008, Congress may finally have had enough.

"You can't use taxpayer money to pay out $18 billion in bonuses," an angry Sen. Claire McCaskill says.

An angry U.S. senator introduced legislation Friday to cap compensation for employees of any company that accepts federal bailout money.

Under the terms of a bill introduced by Sen. Claire McCaskill, D-Missouri, no employee would be allowed to make more than the president of the United States.

Obama's current annual salary is $400,000.

"We have a bunch of idiots on Wall Street that are kicking sand in the face of the American taxpayer," an enraged McCaskill said on the floor of the Senate. "They don't get it. These people are idiots. You can't use taxpayer money to pay out $18 billion in bonuses." Video Watch McCaskill's heated words »

McCaskill's proposed compensation limit would cover salaries, bonuses and stock options.

On Thursday, Obama said the prospect that some of the $700 billion Wall Street bailout could end up paying for bonuses to managers of struggling financial institutions was "shameful."
Don't Miss

* Obama blasts 'shameful' Wall Street bonuses
* Giuliani: Cutting bonuses means slashing NYC jobs

The president said it was the "height of irresponsibility" for executives to pay bonuses when their companies were asking for help from Washington.

"The American people understand we've got a big hole that we've got to dig ourselves out of, but they don't like the idea that people are digging a bigger hole even as they're being asked to fill it up," Obama added.

McCaskill's proposal comes three days after struggling banking giant Citigroup -- which has taken about $45 billion from the government's Troubled Asset Relief Program -- reversed plans to accept delivery of a $42 million corporate jet. The company changed its mind under Treasury Department prodding.
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Former New York Mayor Rudy Giuliani defended corporate bonuses Friday, saying that cutting them also means slashing jobs in the Big Apple.

"If you somehow take that bonus out of the economy, it really will create unemployment," he said on CNN's "American Morning." "It means less spending in restaurants, less spending in department stores, so everything has an impact."

[terisan]

7. I was surprised to find that McCaskill in worth over 30 million. One of the 15 richest Senators

[Lorien]

13. And that is relavant how?

Clearly she's not on board with the class war.

[terisan]

28. I do not think she is. Demagogue tactics-this is so evil!! then votes for the bailouts

against the people and for the multimillionaire class.

[terisan]

34. I use Open Secrets.net to get an idea of every Congressperson;s possible self-interest

I think the requirement for financial disclosure is a good thing. The next financial disclosure reports are due on May 15. Be interesting to gauge how much Congresspeople gained or lost during the crash of 2008.

[louis-t]

21. POS Rudy 9/11 sez "taking away bonuses

will hurt economy and create unemployment." What an elitist. Asshole.

[pfitz59]

32. Why limit to "bailout money"?

What about defense contractors and other war profiteers? What about any company that receives over half their revenue from taxpayer sources (fed/state/local)! Why do college football coaches get paid more than the leader of the free world? Also, count ALL compensatio as regular income! Eliminate "capital gains" tax rates!

[Autumn]

4. I would rather have their bonuses

eliminated but if reduced is the best we can get I can handle that. Doesn't mean its right but better than nothing.

[acmavm]

16. And why is reducing the BEST that we can get? That's crap.

[Autumn]

20. I just really don't think

our politicians will go against their base. They might throw us a bone but we all know who will get the prime cuts of beef. And I got to say it is worse than crap.

[acmavm]

26. Oh I think you're right. They aren't gonna really put the clamps

to any of this and they're gonna keep handing out the bucks and we're gonna just keep taking it in the shorts.

I'm just saying, something COULD be done.

[terisan]

29. Agree. It is crap and something can be done if we demand it.nt

[Autumn]

30. I have been a yellow dog all my life.

and now I am just beginning to consider my self an old stray dog, the last 15 years or so have shown me they really don't give a fuck about us. And I find myself wondering why I ever barked for them. It's not that something COULD be done, it fucking SHOULD be done. Sorry for my language but this is sickening.

[radfringe]

5. our bonuses are dependent on meeting goals

In my department we have an "X" dollar in sales to meet. If we meet or exceed that number we get 100% of our bonuses (which are a percentage of our yearly gross). If we don't meet the goal, our bonus is reduced in relation to the proportion of sales we did make.

This means bonus is tied to performance, and not a hand-out for failing.

[terisan]

6. Bonuses in many firms go to everone, including secretaries and are part of the

salary structure. You may get bigger bonuses in profitable years and smaller ones in unprofitable years but the bonus is really a part of the salary. If these companies have bonuses cut you are hurting those workers.

It is the CEO and upper levels that need to be cut and I suspect the legislation will not sufficiently address that----the White House policy planners, like Rubin (Citibank multimillionaire will see to it).

This is a divide and conquer strategy. Get one part of workers to attack another group of workers. The mid and lower level employees are very defensive now since they are feeling attacked.

[bertman]

8. I disagree that this is a divide-and-conquer stategy, terisan. Why should ANYONE get

a bonus when a corporation is in such dire straits that it is begging for federal bailout money?

I and my business partner run a small business. We pay profit-sharing bonuses to our employees based on the profitability of the company at the end of the fiscal year. No profit. No bonus. For anyone. Including the owners. That's just good business.

It's unfortunate that the lower level employees are working for assholes who reward themselves with bonus packages that resemble the GDP's of small nations. But that doesn't mean the taxpayers should have to pay for any of their bonuses. IMO.

[Lucky Luciano]

12. How about my trader friend who had a PnL of $250MM

trading for the bank's proprietary trading business. Most people sucked - particularly with prop trading strategies. However, my friend had a spectacular year and was feeling really good except for the fact that it was a bad year to have a good year. Yesterday, it was reported that his bank slashed bonuses 60% (the bank has not received any assistance from the government and it is not an American bank, but the stock is down 80% from the peak).

His PnL was very high quality PnL in that it was consistent without huge up and down swings relative to the final number and everything was liquid. In 2006, he could expect a 10% (maybe even 12%!) payout or $25MM. What should he get during a down year when the overall bank lost money? There is no way he should get bageled (zero bonus). At least they should have the decency to pay him 5% and apologize profusely and make other guarantees for the future to retain him. I do not know what they paid him yesterday, but I know he was interviewing elsewhere as a negotiating tactic to hold his bosses hostage with better offers and the threat of losing him. He will have no trouble getting offers with strong guarantees from certain banks that are quite healthy.

[riqster]

17. If your friend works for a company that is subsisting on taxpayer money

Then, no bonus. UNLESS it can be shown NOT to have come from the taxpayer.

[Lucky Luciano]

19. No taxpayer money has been used from the foreign government

that would do this.

If there was taxpayer assistance, then you suggest that he get paid the same as the schmucks who fucked it all up though he has demonstrated extreme superiority? No way. Winners should get rewarded - ath the very LEAST, they can guarantee him deferred compensation.

What a horrible year to have a spectacular year! A bummer. He is a pretty nice guy too.

[riqster]

23. Agreed, he should be rewarded

He must be exceptionally motivated and talented to have done so well, given all of the constraints placed on him this year.

My only proviso is that taxpayer money not fund it. Pull the funds from the dipshit CEOs at the top, maybe cut their office redecorating funds, or some other source that can be demonstrated to be in sync with the purpose of the bailout. Or Congress can write exemptions into law for workers such as your friend. What we don't want to do is give the undeserving a loophole through which they too can get bonuses.

[bertman]

24. Lucky, your friend is getting screwed, no doubt. Unfortunately, the fate of individuals

always rides on the fate of the company at large. He needs to take up his problem with the execs who administer the bonus plan. If they can't help--or don't want to--your friend has several options: tell them to shove it; grin and bear it; keep working like a demon and try to bring the same results in again; become like the other slackers and help the company sink.

I'd be very surprised if this company doesn't see how valuable this person is and reward him despite the stock drop. If they don't, they're shortsighted.

[terisan]

18. In some of these firms a bonus or part of one is not profit-sharing but deferred salary.

The monthly salaries are deliberately lower than in comparable jobs elsewhere and the bonus or a significant part of it is not related to to the worker's performance or the companies--it is more like deferred compensation. The company gets to withhold part of your salary throughout the year and pays you that part right before Christmas.

For the lower level employees the bonus may go toward a big purchase like a car, a huge medical bill, or next year's budget. For others it goes for luxuries-but it is essentially money they would have been paid earlier for just doing their job.

I have no affection for the big money people (even the relatively honest ones) who are compensated in the multimillions, and no problem with people not getting profit-sharing when there is no profit.

I am bothered by poliicians who, in an effort to jump on a hot button issue, like insane executive compensation, don't acknowledge these distinctions.

Robert Rubin, who just resigned his position at Citibank has been planning these fiasco bailouts. He made a fortune from his Citibank connections and has defended the subprime business. Yet he is one of the Obama administration's chief advisers.
Larry Summers, another administration bigwig, had prevented derivatives from being subject to oversight.

No one is pointing out who are the planners of the administration.s giveaways when they jump on the hot button issues with simplistic attacks.

If McCaskill or Obama simply pointed out the issue of the lower ranked employees, much could be accomplished. As it is, I beileve the super-execs will figure a way to get their big money (it will come from other pots they control) and the government insiders will be perfectly fine with it.

The real issue is why is any money going to these entities--they are not going to invest in us-they are investing overseas.

Why are you in favor og giving these fims multi-billions of taypayer money . Why are you focusing on bonuses and not the underlying crime???





I believe that in private the politicians do not express the anger they are exhibiting on stage and Rubin probably flat out says that they deserve it.

[bertman]

22. terisan, I understand and fully agree with what you are saying. Most high-level "players"

think they deserve anything they get, no matter how it impacts the lowly working-class stiffs.

I include politicians in the "high-level" category.

[terisan]

33. For lower ranks "bonuses" are often deferred salary compensation in lots of companies

The monthly salaries are deliberately lower than in comparable jobs elsewhere and the bonus or a significant part of it is not related to to the worker's performance or the companies--it is more like deferred compensation. The company gets to withhold part of your salary throughout the year and pays you that part right before Christmas.

For the lower level employees the bonus may go toward a big purchase like a car, a huge medical bill, or next year's budget. For others it goes for luxuries-but it is essentially money they would have been paid earlier for just doing their job.

I have no affection for the big money people (even the relatively honest ones) who are compensated in the multimillions, and no problem with people not getting profit-sharing when there is no profit.

I am bothered by poliicians who, in an effort to jump on a hot button issue, like insane executive compensation, don't acknowledge these distinctions andjust play to the people's anger.

Robert Rubin, who just resigned his position at Citibank has been planning these fiasco bailouts. He made a fortune from his Citibank connections and has defended the subprime business. Yet he is one of the Obama administration's chief advisers.
Larry Summers, another administration bigwig, had years ago prevented derivatives from being subject to oversight.

Few out who are the planners of the administration.s giveaways when they jump on the hot button issues with simplistic attacks.

If McCaskill or Obama simply pointed out the issue of the lower ranked employees, much could be accomplished. As it is, I beileve the super-execs will figure a way to get their big money (it will come from other pots they control) and the government insiders will be perfectly fine with it.


The fundamental question is being ignored -Why have we given billions to Wall St, Why is Obama insisting on giving more billions, is this investment capital going overseas, and why are we buying virtually worthless goods?

The bonus issue is the red meat issue thrown to us "mad dog " citizens to distract us from the robbery that is taking place. (Chomp Chomp good steak ! .. What thieves?)

[Lorien]

15. What was YOUR bonus last year?

and did you run your company into the ground before getting it? Did you take public funds?

[bertman]

25. Lorien, are you asking me or terisan?

[terisan]

35. Ah If I am going to make any money, I'll probably have to run for office in the USA

[Igel]

38. I'll interlope.

Why not?

The problem is what the contract and expectations are with bonuses, not the presence or absence of them.

I worked for a corporation that rarely gave out bonuses. One year they had exceptional income and we worked exceptionally hard. We got a bonus. Such was the nature of the understanding; we worked for our salaries, not in anticipation of a bonus. Mediocrity or exceptional performance, you draw your salary (unless you do such a bad job you're fired).

Then later I was on the board of a non-profit with a large profit-center associated with it. The "CEO" had a contract that called for a bonus. To award nothing would have been a dire insult; she took a salary cut to work for us, with the bonus considered, by contract, part of her compensation package. The first year she was with us we lost over $500k. We gave her a large bonus, because the year *before* we lost $1 million. Get it? We lost money, and she was responsible ... for our not losing more. Lots of 16 hour days, 6 days a week.

People objected at the amount we were going to award, there was a fight. So we decided to set up a bonus pool--there had been none before. There were those who objected, saying that nobody should get a bonus if the organization lost money. They were idiots--that's often the worst time to have a manager quit because he's insulted or underpaid, and when you want to encourage them to put in extra time to turn the organization around. (Of course, it requires the ability to judge when the deficits are due to management stupidity and forces beyond their control, something the idiots probably couldn't do.) The idiots lost that fight, and the bonus pool was set up in a complicated way. It took into account both projected budget results as well as actual results, so that losing less money than expected was a positive; it deferred well-earned bonuses from bad years into good years or rolled them into severance packages should the manager quit or retire before a good year. But we made sure that our employees got what we thought they were worth. During a recession a store manager isn't fully responsible for the downturn; during a rainy, cold winter restaurants with lots of outdoor tables and few indoor tables have trouble making money.

Look at it this way, if it helps: When you go to a restaurant you have a waiter. The waiter has a wage that he draws. If he does a truly abysmal job, there's no bonus for him. If he does an ok job, he gets a bonus. If he does an exceptional job, he gets a large bonus. If the meal sucks because the chef botched your meal, but the waiter did a superb job, I give the waiter his bonus; some wouldn't, but that's punishing the waiter for the chef's error and, I think, is unfair. Of course, "bonus" has a different name in this setting: We usually call them "tips". But it's a bonus, one that's considered part of his remuneration yet adjustable based on performance. If the restaurant loses money, the waiter still gets his bonus, or at least should--even if the management includes the tip as part of your bill. This is understandable: There's no class envy or jealousy involved.

[Dr.Phool]

9. Tax the fuck out of them.

Put the money to good use.

[Lorien]

14. No, they'll just find more loopholes. Cap their salaries and take away their

bonuses. They're taking public money, they should make no more than a public servant does.

[bemildred]

10. A 90% highest tax bracket and 90% highest inheritance tax ought to do the job. nt

[Festivito]

11. Tax rates should depend on underling pay and benefit amounts.

If underlings are payed well, so can the exectutive be payed well. Where there is disparity, tax rates skyrocket/

[Jamastiene]

27. I'm liking what President Obama is doing so far.

He seems to be able to see through bullshit and address it. He's doing a good job so far.

[w4rma]

31. Much better. Still not there yet. (nt)

[Democrats_win]

36. Good for Obama. I still blame the lazy stockholders. they're getting what they deserve.

People have been complaining about high exec compensation for years yet the lazy stockholders have done nothing. Now that they're losing a lot of money (again), why don't they demand lower exec pay?

One columnist said that being close to the money should not be an excuse to pay them big bucks. The workers are far more important to the company than the CEO in the long run. BTW, we are living in the long run which is 28 years after the "Reagan screw-u America revolution."

[dysfunctional press]

37. the highest salary in a company shouldn't be more tha 50x the lowest.

and that includes contract workers and any services the company hires out(janitorial, etc..), and includes all compensation, including bonusses and stock options.

[izquierdista]

39. Hang their bonus from a tree

In a big sack of one dollar bills and give them a 10 foot head start as ALL of their employees get a chance to run and grab it as well. :rofl:

[dipsydoodle]

40. BBC News link

Obama action due on executive pay

US President Barack Obama is poised to reveal details of new rules limiting executive pay to $500,000 a year for firms getting a US taxpayer bail-out.

His administration is also looking at other potential caps on items such as golden parachutes to executives.

The president is tapping into outrage at Wall Street bonuses paid in 2008 when taxpayers propped up many firms.

He told NBC TV that taxpayer-backed executives had "responsibilities to not be living high on the hog".

http://news.bbc.co.uk/1/hi/business/7869265.stm

[harun]

41. A yahoo news link with a few more details:

http://finance.yahoo.com/news/Obama-to-detail-compensation-apf-14246993.html

[harun]

42. Republicans really cannot oppose this, they need to act on this quickly

Will be a very popular measure.