Obama and executive salary caps

February 5, 2009
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All things considered, there shouldnâ??t be a fuss about President Obamaâ??s plan to cap salaries of executives in companies that receive federal bailouts.

Thatâ??s the take of Dan Dalton, an Indiana University specialist on corporate governance.

Dalton points out that Obama is open to execsâ?? receiving more than $500,000 â?? so long as the compensation is based on performance.

For the right kind of person, the opportunity is huge, Dalton says. A turnaround artist not only could draw a huge paycheck for the effort, but also could emerge as a hero.

Americans generally donâ??t mind othersâ?? making big paychecks if the money is earned. Hardly anyone complains about the compensation of Apple chief Steve Jobs because of the magic he works with technology, Dalton notes.

Most of the gall over executive compensation rises from the execs having run the companies into the ground and still living high, he says.

What are your thoughts? Do you mind executives making huge compensations if they run their companies and institutions well?
  • I agree with Obama on this one. I just don't like the idea of: You have ruined the company, lost X amount of dollars and/or X amount of Clients under your watch -- Since we are getting bailed out by the tax payers, here is a HUGE bonus.

    A good boss in a company understands that if times are good, they (and the rest of the company) gets bonuses, if times are bad for the comany, bonuses shouldn't even be seen. It is as simple as, company does well, you do well, and vise versa. Large companies should have the same privlages and pitfalls as small/startup companies. The Higher ups of these big institutions should receive the same slack performance with the same coushin as the smaller companies.

    Even if the boss is a good boss he/she can see downturns in the economy, it is just a matter of how can he/she respond to this situation with the least amount of financial loss (if any).
  • I am sure you will hear the free market types say, $500K, why not limit it to $10, heck $1, etc. as a reverse logic justification for not having salary caps. But the fact of the matter is that management guru Peter F. Drucker long said that executive compensation if not properly monitored by corporate boards could significantly undermine capitalism. It was part of Druckers position that capitalism alone will leave society at harm; e.g. you need non-profits / social mechanisms, for social harmony. Otherwise you get social harmony with socialism. Irresponsible boards will drive us to socialism. Not Obama.
  • Finally! Someone actually not blaming the end decider result, but the source of the problem. If a company is in it to make money (capitilism), they should be responsible in how they divey up the money. If they do not monitor outflow as they should (and Frank stated), they will be responsable for socialism and not Obama. Granted, Obama's and his administration's policies may be Socialist, but the policies would not go into affect if the companies in question were doing their job in fluxuating (sp?) their spending with the economy appropiately.
  • Sing it franky!!!! I haven't heard any fuss.... who is fussing? NOBODY.....!!!! You know why? Because they know they don't deserve more than $500k. Zero people will step out into the media and argue this position. When they do.... you can kiss your position and your company goodbye. Imagine some hot shot grabbing the mic and expressing his opinion and the backlash that it would ensue. Personally I hope it happens and so do you Norm. What a story that would be.
  • I've heard comments already how the government shouldnt tell a private company what to do on compensation.

    I correct those people by saying the government is not telling them....their lender is. And that is very typical.

    Just like a pro-athlete or movie star, more power to them if they can get someone to fork over huge pay. I blame the Board of Directors.
    CEO compensation should be tied to short-term AND long-term performance. Through their efforts, if the company is providing products, services, and jobs and growing, then pay what you need to.
    But if it's all based on quarterly or even annual earnings but has sacrificed the overall value of the company as a 'going concern', then that performance should not be handsomely rewarded.
  • This issue has more to do with government control over a company's business decisions than anything else. Where does it stop? You've seen complaints that Citi has it's name on the Mets' stadium, I believe. Other complaints have to do with some of these banks holding Super Bowl parties. Company jets ... It goes on and on. Today, the government's position is a salary cap. Do you really think it will stop there? Think of everything else the governments gets itself into. Highway funds? Strings attached. Medicaid? Strings attached. The government should not be providing any money to these companies anyway. But now, they should not be dictating how the business is run.
  • DP must be one of those executives with the golden parachute!
  • Ha! No parachute here. I think, maybe, if I were more driven, applied myself better and was more tactful with my opinions in the companies where I've worked, I might be able to earn me a golden parachute! Maybe. Regardless, it is purely principle. This is a horrible position for our country to be in. The banks are supposedly privately owned and yet work in tandem with the government. Look in the dictionary for a specific word that ends in ism or ist and see if it doesn't sound like where we are now or where we are headed with this. I'll give you a hint - it does not have to do with a constituional republic.
  • Frank.......I like this new tune and Joe is right on as well. There is no totally FREE market because when capitalism is unable to regulate itself and becomes a self-serving entity the result is visited on everyone else in a way that creates an untenible inequity. This condition requires attention and the freedom we strive for is deminished by this abuse, exposing its inherent flaws. The last thing many want is for the govt. to get involved but the offenders ability to self-correct is non-existent and something must be done.

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