Today, President Obama announced a salary cap on senior executives of companies that take government assistance: $500,000 per year.
On first glance, it's easy to say that this makes sense. First of all, they take government money, shouldn't there be some strings attached? And, come on, 500K? I don't think many CEO's will go hungry. And it seems to make good fiscal sense, right?
Well, let's look further into it. Let's say Mary is a CEO of a tech company. She's successful, and has a reputation of turning struggling companies around. She's make a cool $5M salary plus bonuses. Now we have A1 Financial Management, and large financial company that is fighting for survival. They have taken TARP money, and their board decides they need a talented CEO to turn things around. They want Mary to for the position...
Does Mary take a 90%+ pay cut? Or do they have to settle for a second tier CEO, maybe an untried talent. Maybe they get lucky, but when a company is fighting for its survival, won't they want the best they can get?
Now comes Rep. Barney Frank, who suggests that maybe President Obama didn't go far enough, how about extending salary restrictions to every financial company, or even every company in America.
Doesn't that scare anyone a little bit? I know defending high-earners isn't popular, but where does it end? Raise minimum wage, lower "maximum wage", from each according to their ability, to each according to their need?
Wednesday, February 4, 2009
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4 comments:
It scares me. The government has no business digging this deep into private companies. First of all, stop bailing private companies out. They already have a bailout program, it's call bankruptcy. Secondly, you are absolutely correct saying that Mary would never take that kind of pay cut. Last, this new dumb rule will only result in a bunch of weaslely ways around it. "So my company can only pay me $500k and your company can only pay me $500k, how about we join each other boards and double that? How about we get a bunch of other CEOs and make all sorts of "consulting" gigs to pump up our pay."
While it should go without saying that even a legitimate President’s “ordered” $500,000 pay cap is an unenforceable intrusion into the private sector, as if that weren’t enough, Obama LACKS EVEN OSTENSIBLE AUTHORITY to issue the order UNTIL HE OVERCOMES “RES IPSA LOQUITUR” BY SUPPLYING HIS LONG FORM BIRTH CERTIFICATE AND PROVING HIS ELIGIBILITY TO BE PRESIDENT UNDER ARTICLE 2 OF THE US CONSTITUTION.
Ted,
Questioning President Obama's eligibility does not add to the discussion. It is not on topic, and by doing so, we risk sounding just like the "selected not elected" crowd after the election of President Bush in 2000.
@Ted: What Pat said...
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