Friday, October 23, 2009

Should Wall Street Execs Have Their Pay Cut By The Gubb'ment?!?

A wise man once said, "messin' with my money is like messin' with my emotions".[1] I happen to agree. There's a lot of stuff I'll tolerate on The Day Job, much of which has been well-chronicled here. I've been shouted at, lied on, and threatened with physical assault by customers. I've always found my ways of either confronting, coping, or otherwise working the system to deal with such issues, because at the end of the day, I have a a family to shelter, clothe, and feed. G.P. does not pay the bills.

Cut. The. Check.

This might seem a bit sad on the surface, but I actually just really, really, really like what I do for a living, and such occurrences are the rare exception, not the rule. So, I can deal with a jerk here and there, the good customers far outnumber and outweigh them.

But let's keep it one hunned, I still do it for the money, just like errybody else. And if I was approached and told I needed to take a drastic 90% pay cut, I might have to kick rocks. Which is why I find myself somewhat conflicted about the actions the Obama White House and Pay Czar are imposing on the folks most responsible for the collapse of Wall Street.
The Obama administration will soon order the nation's biggest bailed-out companies to drastically cut the pay packages of 175 top executives, a senior administration official confirmed to CNN Wednesday.

Kenneth Feinberg, who was named the White House's pay czar in June, will demand that each of the seven largest bailout recipients lower the total compensation for their top 25 highest paid employees by 50%, on average, the official told CNN.

For the past two months, Feinberg has been reviewing pay plans at Citigroup (C, Fortune 500), AIG (AIG, Fortune 500), Bank of America (BAC, Fortune 500), General Motors, Chrysler, GMAC and Chrysler Financial in an effort to put these firms in a position to pay back bailout money as soon as possible.

Under the plan, which is expected to be officially released by the Treasury Department next week, annual salaries for executives at those seven firms are expected to fall 90%, on average, the official said.

Another source in the Treasury Department told CNN that Feinberg is "trying to strike the balance" between protecting taxpayers and allowing companies to have the ability to "grow their way out of TARP."

Some compensation experts have worried that the firms that have received the most bailout funds could wind up losing top talent to companies that have already paid back the government and are not subject to Feinberg's pay restrictions, such as JPMorgan Chase and Goldman Sachs.

According to other reports, the plan will come down particularly harsh on embattled insurer AIG. Within AIG's controversial Financial Products division, the unit that led to the company's near collapse, no employee is expected to receive more than $200,000 in total compensation, several reports indicated.

But the moves by Feinberg should not come as a major surprise. Last week, outgoing Bank of America CEO Ken Lewis said he would not accept a salary or bonus for 2009, and the bank said the decision came after Feinberg "suggested" it to Lewis.

Lewis' decision followed an uproar over indications that he is poised to walk away with a minimum of $53 million in pension benefits after he retires.

Lewis' cash salary has been $1.5 million annually since he took over as CEO in 2001. But he actually made $63 million in pay and perks over the past three years, according to filings -- including almost $10 million last year.
You can look at this two ways.

1) This Is Socialism At Its Worse. - Many of guys worked hard, they signed legal contracts that stipulated the amount they were to be compensated, and not all of them are directly responsible for the shenanigans of their perspective employers. While you may smirk at going from making $2M a year to just $200k, because $200k is still a come-up in your world, reality is, few of these folks have $200k/year lifestyles. It's going to be a massive adjustment for many of them, and yeah, some folks who don't deserve such a penalty are going to take a loss. Some yachts and winter homes in Aspen will be hitting Craig's List soon.

2) This Is Accountability At Its Best. - We're only talking about 200 or so people at these firms. We're not talking about the clerical staff, entry level guys, or middle managers who simply took orders from above, and enjoyed no such outlandish compensation for outlandish risks that backfired. If it weren't for the gubb'ment bailouts of both Bush and Obama, these guys would be working at Sizzler right now. And if such restrictions make these guys flight risks to leave for greener pastures at other companies, so be it. What other companies are going to pay idiots that ran one company into the ground such outrageous salaries anyway? Let em' go out there and find out how unemployment looks for the rest of the country. It's hard having sympathy for these morons when the $200k they're complaining about could have paid the salaries of a 1/2 dozen mailroom clerks that were let go because of their malfeasance and are at home praying for an extension of unemployment benefits. And those mailroom guys would kill each other for a Sizzler job right now.

I'm somewhere in the middle of both of these extremes. I hate the fact that some innocent, hardworking people are having sanctions imposed on them. But reality is, that's life. It's hard, but it's fair. Hard work doesn't entitle you to a permanent lifestyle, as folks in Detroit have long since learned. These execs are still gainfully employed, and if they're smart enough to stick it out, the minute they pay the gubb'ment (ie: us taxpayers) back, they'll be making good money again, and be able to get that yacht off layaway and back into Biscayne Bay.

The folks whose lives have been irreparably ruined as a result of their risktaking could only pray for such an option.

Question: Is it fair for the Feds to be severely limiting the pay Wall Street execs who were saved by the bailout? Is this Socialism or merely Accountability?

Pay czar ready to drop hammer [CNNMoney]

[1] Name that Wise Man.

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