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Stupid Idea: Capping Financial Execs Pay
Populists won't like this, but I'm not running for anything, so get over it...
The idea of including comp caps in the bailout legislation is just plain stupid. Oh, yes it resonates with the common folk, but it’s pandering that can do real harm.
No pay, no talent. There are still plenty of solvent financial firms that will snap up the top talent of the dislocated executives at rates that make the proletariat blush. So a $400K cap is just plain stupid. If you think mid-level or a
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Comments (6)
jcon; you might not like what the public thinks is right.
get over it..
September 23, 2008 2:47 PM | Reply | Permalink
I tend to agree that a cap would be too arbitrary, too hard to enforce, and would simply result in a good deal of migration or renaming of jobs.
Rather, a temporary but fairly fierce tax on incomes (including capital gains, deferred compensation guaranteed, and benefits) over, say, $10 million from January 1, 2007 to December 31, 2009, might be in order -- income over that threshold might be taxed at say, 50%, rather than the curren mid-30s. This would recover something for the treasury from ALL overpaid executives, and would especially hit anyone who got a golden parachute in the last two years...
Not sure whether ex post facto limits might apply -- that's a serious consideration, and there are issues of fairness to non-executive compensation (athletes, entertainment, etc.), but a temporary tax hike on very very high incomes would probably be pretty popular, right now, and have less distorting effects than a salary cap.
September 23, 2008 2:58 PM | Reply | Permalink
I personally support a thoroughgoing US maximum wage law. But such a law would be a major and radical regulatory innovation, and would require a lot of thought and debate in order to be intelligently designed and implemented. This is not the sort of thing to be cooked up on the fly in a thoughtless way while we are scrambling at the same time to pass some sort of financial bailout in a timely fashion. And the same goes for an executive salary cap.
It is not the broad policy proposal that is stupid here, at least not in my view. But what would be stupid would be any attempt to ram through some crap, half-baked, seat-of-the-pants salary cap regulation while we are busy worrying about how best to stabilize the financial industry.
This is no time to be harping on our wish list and distracting legislators from their chief business of putting a floor under the financial market collapse. I'm worried about my job and everyone else's job. They can do the other stuff later.
September 23, 2008 3:44 PM | Reply | Permalink
I'm not sure what we want is a cap. I for one think if you can get it fine. However, what I cannot fathom is that when a CEO royally screws up there appears to be no downside. So here's my suggestion the firms that are getting bailed CEO gets fired, no parachute, no bonus, no options nada, zip. New CEO come in with a performance based contract. Base pay no more than 10X the lowest paid employee and bonuses based on performance and paying back the treasurey.
This meme - cap no talent is BS if there's a cap and everybody is paying the same you get what you can get.
September 23, 2008 3:52 PM | Reply | Permalink
This the deal.
Making money isn't wrong in itself, but the ridiculous multiples CEOs are receiving bear no relationship to the value they create. And these guaranteed payouts, massive packages regardless of performance.
That's un-American.
Oh, and yeah, jcon...Sorry, pal. But that "no pay, no talent" is real thin. Whatever the salary, it'll still be large, and plenty of "talented" folks will want it.
Just like all those "talented" geniuses fucking up the economy right now.
September 23, 2008 4:17 PM | Reply | Permalink
I think you'd only cap (or eliminate altogether) exec payout when they file for U.S. govt. help. That means they've messed up. We don't need that kind of talent running our financial institutions.
Personally, I think they should be fined.
September 23, 2008 4:14 PM | Reply | Permalink
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