President Oabama Puts Cap on Executive Pay
The days of big paydays and bonuses for Wall Street Executives may be over. President Barrack Obama is in the process of setting into motion new legislation that will cap executive salary at $500,000 for senior executives of companies how have accepted bailout money from the Federal Government. Any bank that accepts government funds will have to adhere to executive pay caps. It is about time that bailout money participants be held accountable for TARP (troubled asset relief program) funds that they have received. Banks like Merrill Lynch and Bank of America have continued to pay exorbitant salaries to its top executives. The Obama administration does allow banks that want to compensate their executives more than the $500,000 salary cap may do so by issuing company stock. The stock can then be sold once the bailed out firm re pays the government for any borrowed TARP money. This is very good way to motivate executives into shape. This way in order for senior executives to make money, the company stock must be healthy and the firm must be profitable. In order for executives to make the millions of dollars that they are used too, the bailed out firm’s stock must sky rocket. Americans are tired of watching bailout money being used for huge bonuses, parties and executive perks.
The government is not against wealth and the purchase of luxuries. They are against the irresponsibility that has plagued top management of some our publicly traded companies. "This is America. We don't disparage wealth. We don't begrudge anybody for achieving success," Obama said. "But what gets people upset — and rightfully so — are executives being rewarded for failure. Especially when those rewards are subsidized by U.S. taxpayers."
Sam Walton built a financial empire and made many people rich. He achieved this great wealth by cutting corners and being responsible with money. Executives who travel are required to stay at economic hotels. They usually sleep two people to a room as well. No one is allowed to stay at a 5 star hotel during a business trip even if the individual is willing to pay for it. Everyone is treated the same. Executives on Wall Street who did not found the firm that they are working for have become very spoiled. They expect high dollar salaries and bonuses because they have fancy Ivy League credentials and therefore are entitled to very high pay. Top executives should be rewarded based on the current performance of the company, and not on past achievements. Startup companies pay their top executives minimum salaries but give them stock options. Everyone works hard and when and if the company does well; rewards are reaped. Executives on Wall Street want money first and apparently must not care if the company does well or not. Ken Lewis, CEO of Bank of America, received a compensation package worth more than $20 million. He received an annual salary of $1.5 million plus more than $18 million in bonus money, stock and other benefits.
The salary restriction only applies to senior executives. It does not apply to salespeople who earn on a commission only basis. These people will be allowed to earn as much money as they can based on their commissions. The Obama administration needs to be careful with this policy. Bailout firms can very easily manipulate job titles. Wall Street is known for figuring loopholes and other means to avoid abiding by the new rules. I am glad that President Obama is finally imposing caps on executive compensation packages for banks and investment firms who have received bailout money. It is not right that the taxpayer pay for these individuals to purchase luxury cars and fancy Manhattan apartments. The American public should not be made responsible for the mistakes and excesses of Wall Street.
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The days of big paydays and bonuses for Wall Street Executives may be over. President Barrack Obama is in the process of setting into motion new legislation that will cap executive salary at $500,000 for senior executives of companies how have accepted bailout money from the Federal Government. Any bank that accepts government funds will have to adhere to executive pay caps. It is about time that bailout money participants be held accountable for TARP (troubled asset relief program) funds that they have received. Banks like Merrill Lynch and Bank of America have continued to pay exorbitant salaries to its top executives. The Obama administration does allow banks that want to compensate their executives more than the $500,000 salary cap may do so by issuing company stock. The stock can then be sold once the bailed out firm re pays the government for any borrowed TARP money. This is very good way to motivate executives into shape. This way in order for senior executives to make money, the company stock must be healthy and the firm must be profitable. In order for executives to make the millions of dollars that they are used too, the bailed out firm’s stock must sky rocket. Americans are tired of watching bailout money being used for huge bonuses, parties and executive perks.
The government is not against wealth and the purchase of luxuries. They are against the irresponsibility that has plagued top management of some our publicly traded companies. "This is America. We don't disparage wealth. We don't begrudge anybody for achieving success," Obama said. "But what gets people upset — and rightfully so — are executives being rewarded for failure. Especially when those rewards are subsidized by U.S. taxpayers."
Sam Walton built a financial empire and made many people rich. He achieved this great wealth by cutting corners and being responsible with money. Executives who travel are required to stay at economic hotels. They usually sleep two people to a room as well. No one is allowed to stay at a 5 star hotel during a business trip even if the individual is willing to pay for it. Everyone is treated the same. Executives on Wall Street who did not found the firm that they are working for have become very spoiled. They expect high dollar salaries and bonuses because they have fancy Ivy League credentials and therefore are entitled to very high pay. Top executives should be rewarded based on the current performance of the company, and not on past achievements. Startup companies pay their top executives minimum salaries but give them stock options. Everyone works hard and when and if the company does well; rewards are reaped. Executives on Wall Street want money first and apparently must not care if the company does well or not. Ken Lewis, CEO of Bank of America, received a compensation package worth more than $20 million. He received an annual salary of $1.5 million plus more than $18 million in bonus money, stock and other benefits.
The salary restriction only applies to senior executives. It does not apply to salespeople who earn on a commission only basis. These people will be allowed to earn as much money as they can based on their commissions. The Obama administration needs to be careful with this policy. Bailout firms can very easily manipulate job titles. Wall Street is known for figuring loopholes and other means to avoid abiding by the new rules. I am glad that President Obama is finally imposing caps on executive compensation packages for banks and investment firms who have received bailout money. It is not right that the taxpayer pay for these individuals to purchase luxury cars and fancy Manhattan apartments. The American public should not be made responsible for the mistakes and excesses of Wall Street.
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Labels: Bank of America, executive compensation, Ken Lewis, Merrill Lynch, President Barrack Obama, TARP
Credit Card / Financial news blog post by Todd Holliday at 6:56 PM 