limiting executive pay

Snowdoggie wrote:

TJ wrote: If limiting people's salaries is the problem, let's cut down what celebtrities make. If Steve Martin can take home $40 million for a stupid Pink Panther Movie is that any better than Wall St.? What about professional atheletes? If a baseball player can turn down $25 Million to play baseball for one season, then maybe Obama should cap their pay -they obviouslky amake too much. The President said this is no time to make profits after all, impling that somehow profits are bad. Not sure how discouraging profits helps get the economy back on track - I thought profits were the whole point. Once the government dictates what one group is allowed to make (even if it a group that we can all agree needs some limits), then where does it stop?

The difference here is that so far Movie Studios are not getting subsidized by the government. If they think they can pay Steve Martin 40 million for a movie and make it all back with a profit, I don't have a problem with that. And if people stop wanting to see Steve Martin in movies, the studios will stop handing him those paychecks REAL fast.

The SC state gov't trips all over itself handing out tax subsidies to film companies with the explanation 'they will spend enough on supplies, motels etc that we will make it back'. One of the scandal rags did an in depth investigation, turns out that the state was losing a wad on every movie. For instance, 'The Abyss' was filmed here in an incomplete nuclear power plant that had been turned into a movie studio. That particular movie cost this pissant little state around a quarter of a million in sales and use tax that was waived. The movie cost around $40 milion to make, grossed $85 million here in the States and $46 million overseas. James Cameron and crew could have afforded the $250K, instead they laughed all the way to the bank.

Snowdoggie wrote: Pro Sports teams are actually subsidized by the government through construction of new stadiums. That is a different deal. I don't think local governments should be subsidizing pro-sports teams. Especially local governments that are broke. Once a company starts getting public money, the government gets a say as to who gets paid what, just like any other stockholder does. This isn't any kind of socialism. This is capitalism. Perverted Capitalism maybe, but still capitalism.

Yeah, ask the City of Charlotte what it cost to build the Panthers' stadium and ask them just how much they have to do with running the team.

Jensenman wrote:

Snowdoggie wrote:

TJ wrote: If limiting people's salaries is the problem, let's cut down what celebtrities make. If Steve Martin can take home $40 million for a stupid Pink Panther Movie is that any better than Wall St.? What about professional atheletes? If a baseball player can turn down $25 Million to play baseball for one season, then maybe Obama should cap their pay -they obviouslky amake too much. The President said this is no time to make profits after all, impling that somehow profits are bad. Not sure how discouraging profits helps get the economy back on track - I thought profits were the whole point. Once the government dictates what one group is allowed to make (even if it a group that we can all agree needs some limits), then where does it stop?

The difference here is that so far Movie Studios are not getting subsidized by the government. If they think they can pay Steve Martin 40 million for a movie and make it all back with a profit, I don't have a problem with that. And if people stop wanting to see Steve Martin in movies, the studios will stop handing him those paychecks REAL fast.

The SC state gov't trips all over itself handing out tax subsidies to film companies with the explanation 'they will spend enough on supplies, motels etc that we will make it back'. One of the scandal rags did an in depth investigation, turns out that the state was losing a wad on every movie. For instance, 'The Abyss' was filmed here in an incomplete nuclear power plant that had been turned into a movie studio. That particular movie cost this pissant little state around a quarter of a million in sales and use tax that was waived. The movie cost around $40 milion to make, grossed $85 million here in the States and $46 million overseas. James Cameron and crew could have afforded the $250K, instead they laughed all the way to the bank.

Snowdoggie wrote: Pro Sports teams are actually subsidized by the government through construction of new stadiums. That is a different deal. I don't think local governments should be subsidizing pro-sports teams. Especially local governments that are broke. Once a company starts getting public money, the government gets a say as to who gets paid what, just like any other stockholder does. This isn't any kind of socialism. This is capitalism. Perverted Capitalism maybe, but still capitalism.

Yeah, ask the City of Charlotte what it cost to build the Panthers' stadium and ask them just how much they have to do with running the team.

Indianapolis just did the same thing with Lucas Oil stadium, we got a tax hike to pay for it.

We hadn't even finished paying for the old stadium that they just tore down.

One word...

Silverdome!

I think we are comparing apples and oranges here. The Feds are handing money to banks, just as an investor would do in an equity situation. Some countries are actually taking ownership of the banks by nationalizing them. Having an equity postion means you have a say in who gets paid what. As far as I know the Feds are NOT handing out money to movie studios in this manner yet.

The movie studios and pro sports teams are getting tax incentives. In other words, in order to give the organization the incentive to do business in a certain location, the government will set their tax rate to zero. That is not taking an equity position in the organization. Here they are just setting tax rates. The government doesn't have the right to run a business or set salaries just because they set the tax rate.

The auto company bailouts, as I understand them are different animal altogether. They are loans. They have to be paid back, although chances are they may not be.

SVreX wrote: I'm of the opinion that executive pay and bonuses should be determined by the owners of the corporation (stockholders). Having said that, if you're gonna ask for tax dollars, you gotta accept the strings attached. I hate the idea of government dictating salaries. But, at some level, I guess you could say that when they ask for and accept govt. money, govt has effectively entered as a partner of some sort, therefore essentially an owner, of sorts.

What he said.

I really hope that there isn't an exodus of talent from these companies right when they need their best and brightest the most.

DILYSI Dave wrote: What he said. I really hope that there isn't an exodus of talent from these companies right when they need their best and brightest the most.

Ha.. I know for a fact they booted a guy at work today who solved Massive quality issues totaling $2M or more. In a previous life he also solved massive 3rd order noise issues with the product..

Snowdoggie wrote: I think we are comparing apples and oranges here. The Feds are handing money to banks, just as an investor would do in an equity situation.

Investors typically invest their own money, the government is "investing" our money.

My point was not to try to say that Hollywood, Detroit, sports teams, and Wall St. are all in the same boat. My point was, once the government starts to dictate what others in industry are worth to their companies, then where will it stop?

It is easy to get public support to stick it to the bankers, but when the snowball starts rolling and Obama gets to decide what you are worth to your company then there will be no one left to fight for you.

I only brought up sports and hollywood because they are two groups that get paid an awful lot of money and I could see the mob turn on them next in the spirit of "helping the middle class".

TJ wrote: My point was not to try to say that Hollywood, Detroit, sports teams, and Wall St. are all in the same boat. My point was, once the government starts to dictate what others in industry are worth to their companies, then where will it stop?

TJ, the sky isn't falling.

I highly doubt that Obama wants to dictate what every worker in the Union is going to earn for every possible job. The gov't is now a major stockholder in these banks. The gov't is now flexing that stock holder muscle by saying "Enough with paying these supposed smart guys millions of dollars to lose all our money - AGAIN." These CEO's have earned the treatment of being neutered by their stockholders. If they can go somewhere else and be paid millions to run another bank into the ground then I'd say more power to them. Again, they earned this failure. They worked really hard at making it happen.They are also indebted to us. They don't get to borrow money and then dicate the terms of the loan back to us. We have the cash, they accept our terms or no cash. It's a deal they're very familiar with, mostly from the other side.

TJ wrote: My point was not to try to say that Hollywood, Detroit, sports teams, and Wall St. are all in the same boat. My point was, once the government starts to dictate what others in industry are worth to their companies, then where will it stop? It is easy to get public support to stick it to the bankers, but when the snowball starts rolling and Obama gets to decide what you are worth to your company then there will be no one left to fight for you.

Okay, I'd need to see a few more details on exactly what the deal is, but I'm pretty sure this isn't a case of the government just setting a cap on an unpopular group. I'm pretty sure this is just a stipulation of the bailout agreements; something along the lines of, "If you want this money, this is what you need to do with it." And one of those stipulations is maximum salaries.

Those companies could decide they want to pay the executives more, but then they'd have to give up the bail out funds.

An analogy: I haven't lived with, or been dependent on, my parents for quite a while. But let's say something happens that I loose my job and/or squander all my money. Not wanting to file bankruptcy, I turn to my parents and ask them for money to keep me afloat. They say, "alright, but you need to limit your spending by not doing track days or eating out." They aren't making me not eat out or do track days, but if I want their money, I have to follow their rules. Since I don't need any of their money right now, I get to spend as much money on Sushi and Cars as I want to.

I have been earning my living analyzing, designing, and administering, compensation plans for about 10 years. I have little bit of an insiders perspective on pay packages.

Executive base salaries rarely exceed $1 million in cash because of the way tax codes are written. Pretty much all executive comp beyond that is a combination of bonuses and company stock given in one form or another. When well-crafted, cash bonuses are tied business results and get paid only if the business is doing well. The theory behind stock (either in options or as actual shares) is that the executives will act in a way that maximizes wealth for the share holders because they have a nice monetary stake in the best stock price. Stock and bonus programs are paid out at the discretion of the board of directors and its those people I would like to have explain the logic of paying bonuses for crappy results.

I think this is is actually a really well thought out policy. $500,000 will cut most executive base pay to roughly half what they were paid before. The part I think is really smart is that companies can issue restricted stock to employees in place of other pay programs. The restriction on the stock is that the TARP money must be repaid before stock becomes yours. So if you are the head Bank X and you figure out how to clean up the mess on Bank X's books and pay the taxpayers back, you get a nice fat reward. If you can't turn things around you get a pay cut and (hopefully) get replaced by someone who can.

This is a very straightforward issue to me. The US government has lent gigantic loads of money to the banks, money that can't be reclaimed by reposessing the banks' stuff or any other method. Until they pay it back, insane-level salaries, hookers and blow, private jet flights and other frivolous expenditure should be on LOCKDOWN. Calling it socialism is like this:

Stupid burnout kid: "Dad, I lost everything, I'm a total mess-up and I need some money to get out of this hole."

Dad: "Okay, I'm going to lend you a bajillion dollars to get back on your feet, but you have to pay me back."

SBK: "Sure thing pops" yoink

6 hours later

SBK: "WHOOO PARTY!!! DUDE CHECK OUT MY NEW PLASMA IT ROCKS!! HEY SOMEBODY HELP ME CARRY THESE KEGS IN HERE!"

Dad: "Son WTF are you doing!?!?!!"

SBK: "Geez lighten up narc, don't be such a control freak. I'll pay you back, now go chill."

As for the slippery slope argument, "If the government can limit these salaries, where will it stop?"

The answer is simple: with anyone who is not receiving money from the government to keep them afloat.

GameboyRMH wrote: This is a very straightforward issue to me. The US government has lent gigantic loads of money to the banks, money that can't be reclaimed by reposessing the banks' stuff or any other method. Until they pay it back, insane-level salaries, hookers and blow, private jet flights and other frivolous expenditure should be on LOCKDOWN. Calling it socialism is like this: Stupid burnout kid: "Dad, I lost everything, I'm a total mess-up and I need some money to get out of this hole." Dad: "Okay, I'm going to lend you a bajillion dollars to get back on your feet, but you have to pay me back." SBK: "Sure thing pops" *yoink* 6 hours later SBK: "WHOOO PARTY!!! DUDE CHECK OUT MY NEW PLASMA IT ROCKS!! HEY SOMEBODY HELP ME CARRY THESE KEGS IN HERE!" Dad: "Son WTF are you doing!?!?!!" SBK: "Geez lighten up narc, don't be such a control freak. It's not like you said I had to pay you back, now go chill."

Edited for correctness

Salanis wrote: As for the slippery slope argument, "If the government can limit these salaries, where will it stop?" The answer is simple: with anyone who is not receiving money from the government to keep them afloat.

Just like with minimum wages, right?

Oh, yeah ...

Salanis wrote: An analogy: I haven't lived with, or been dependent on, my parents for quite a while. But let's say something happens that I loose my job and/or squander all my money. Not wanting to file bankruptcy, I turn to my parents and ask them for money to keep me afloat. They say, "alright, but you need to limit your spending by not doing track days or eating out." They aren't *making* me not eat out or do track days, but if I want their money, I have to follow their rules. Since I don't need any of their money right now, I get to spend as much money on Sushi and Cars as I want to.

If your parents chose to to loan you money that is fine - it is their money. Our government loaned our money - that is the big difference. I don't know anyone who supported the bailout. I know of quite a few people who wrote and called their Congressman to complain about it only to have him vote for it.

It is easy to say this will only affect banks that ask for government help, but that is really not true. If a bank is having some tough times, but is not ready to ask the government for a handout, then they will start cutting executive pay down to the new limit before they ask for a heap of our money out of the trough.

Banks that are doing well, which is a good many banks other than the giant Wall St. ones, who might be paying their CEO's millions and they are doing a good job will look like greedy bankers and they will be under pressure to cut their salaries down to the new cap.

TJ wrote: If your parents chose to to loan you money that is fine - it is their money. Our government loaned our money - that is the big difference.

That's another debate of something totally different. Whether or not our government should have bailed out these institutions involves more flat fish than I want to wrestle with right now.

If a bank is having some tough times, but is not ready to ask the government for a handout, then they will start cutting executive pay down to the new limit before they ask for a heap of our money out of the trough. Banks that are doing well,... will be under pressure to cut their salaries down to the new cap.

We'll see if that happens. But in both those examples, the companies would have decided to cut the pay of their executives, not been forced to by the government.

TJ wrote: It is easy to say this will only affect banks that ask for government help, but that is really not true. If a bank is having some tough times, but is not ready to ask the government for a handout, then they will start cutting executive pay down to the new limit before they ask for a heap of our money out of the trough.

That sounds like a good logical thing to do.

TJ wrote: Banks that are doing well, which is a good many banks other than the giant Wall St. ones, who might be paying their CEO's millions and they are doing a good job will look like greedy bankers and they will be under pressure to cut their salaries down to the new cap.

Oh yeah big corporations always do stuff because they're "under pressure" to do it. Look how Microsoft, Sony, the RIAA,the Big 3 and every patent trolling tech firm in existence have changed their ways thanks to external social pressures. Oh wait...

Anyhow that's up to the individual companies, and with CEOs making 400+x more than an average worker (while getting big fat bonuses for things that would get an average worker fired), I find it REALLY hard to be sympathetic to a CEO taking a pay cut.

BTW I meet a lot of CEOs from companies all around the world at my job and there is a definite trend of incompetence and crooked scumbaggery among them, and while most do a decent job of pretending to be nice people some of them are just rude. Intelligence-wise, most of them seem to be average at best, and the smarter ones are often the most crooked. One of them spoke about his meeting with Rupert Murdoch like he met Jesus or something, that set off alarm bells in my head, and that later turned out to be a very well-founded fear.

I think it was the advent of mutual funds and 401ks that made CEO pay explode like it has. When the stockholders of your company are really a bunch of people spread out all over the country who don't really even know they are a stockholder because they put their money in an index fund, then the CEO and the board of directors can and do get away with murder...there is nobody to hold them accountable.

I do not see why any CEO is worth 400x their workers - they cannot do 400x the work, I am just opposed to the President being the one to decide how much is the right amount for them to make. Just because Obama thinks he's the smartest man on the planet doesn't mean he is, and even if he is, that wouldn't mean he would get it right.

TJ wrote: I do not see why any CEO is worth 400x their workers - they cannot do 400x the work

It's not about how much work you can do, it's the value you bring to the stockholders. And yes - a good CEO can EASILY bring 400x as much value to the table.

TJ said: If limiting people's salaries is the problem, let's cut down what celebtrities make. If Steve Martin can take home $40 million for a stupid Pink Panther Movie is that any better than Wall St

Am I the only one who doesn't think Steve Martin is funny? He never has been the only movie he made I can watch is Planes, Trains and Automobiles and John Candy made that movie. I wish that Obama would step in and fire the people that keep putting Steve Martin in movies. He already ruined the Pink Panther, now he's given a chance to back up and run over it's corpse. Why?!?!

Wally wrote:

Am I the only one who doesn't think Steve Martin is funny? He never has been the only movie he made I can watch is Planes, Trains and Automobiles and John Candy made that movie. I wish that Obama would step in and fire the people that keep putting Steve Martin in movies. He already ruined the Pink Panther, now he's given a chance to back up and run over it's corpse. Why?!?!

+eleventytrillion

DILYSI Dave wrote:

TJ wrote: I do not see why any CEO is worth 400x their workers - they cannot do 400x the work

It's not about how much work you can do, it's the value you bring to the stockholders. And yes - a good CEO can EASILY bring 400x as much value to the table.

I think pay should be a function of how much work you do and how much money you make the company DIRECTLY - because really, the CEO is just directing things and needs those low-budget underlings to get things done. Sort of like a racing team - the team owner / manager need to direct things smartly but it's the drivers, engineers, mechanics and pit crew getting things done. In reality the mentality seems to be "well if the CEO didn't direct this action it never would have happened so he/she deserves the lion's share of the benefits."

If pay was broken down this way I think the world would have a lot more wealthy people (and CEOs would still be very wealthy) rather than a huge struggling middle/lower class and a few outragrously wealthy CEOs. But some say wealth is all relative...

That's just my damn dirty commie opinion though

geomiata wrote:

Wally wrote:

Am I the only one who doesn't think Steve Martin is funny? He never has been the only movie he made I can watch is Planes, Trains and Automobiles and John Candy made that movie. I wish that Obama would step in and fire the people that keep putting Steve Martin in movies. He already ruined the Pink Panther, now he's given a chance to back up and run over it's corpse. Why?!?!

+eleventytrillion

I kept wishing that stupid arrow through his head was real.

GameboyRMH wrote:

DILYSI Dave wrote:

TJ wrote: I do not see why any CEO is worth 400x their workers - they cannot do 400x the work

It's not about how much work you can do, it's the value you bring to the stockholders. And yes - a good CEO can EASILY bring 400x as much value to the table.

I think pay should be a function of how much work you do and how much money you make the company DIRECTLY - because really, the CEO is just directing things and needs those low-budget underlings to get things done. Sort of like a racing team - the team owner / manager need to direct things smartly but it's the drivers, engineers, mechanics and pit crew getting things done. In reality the mentality seems to be "well if the CEO didn't direct this action it never would have happened so he/she deserves the lion's share of the benefits." If pay was broken down this way I think the world would have a lot more wealthy people (and CEOs would still be very wealthy) rather than a huge struggling middle/lower class and a few outragrously wealthy CEOs. But some say wealth is all relative... That's just my damn dirty commie opinion though

So, you are saying that Rick Hendrick (CEO of Hendrick Motorsports, which is worth $335 million and generates $179 million in revenue annually) would not deserve a compensation package worth $6 million if he had a lowly pit worker who only made $15,000, right?

Sorry. I don't buy it. And I don't think you do either.

TJ wrote: Banks that are doing well, which is a good many banks other than the giant Wall St. ones, who might be paying their CEO's millions and they are doing a good job will look like greedy bankers and they will be under pressure to cut their salaries down to the new cap.

I'm crying big fat tears of sadness for those poor under paid Bank CEO's right now. Will the MILLIONS OF DOLLARS OF INJUSTICE THEY HAVE ENDURED EVER END?! Those poor poor men. Stuck driving Mercedes instead of Bentley's.