We are on the brink of a really neat controlled experiment testing the Wall Street belief that senior executives mus be pain tens to hundreds of millions of dollars or the firms for which they work will fail for lack of experienced, high quality senior leadership. This is a truly exciting experiment whether you are libertarian, republican, democrat, or even independent of any affiliation.
Our government is about to cut the remuneration of senior executives at those companies that were threatened by bankruptsy but saved by the largess of the taxpayer via our elected representatives. The saving was carried out by simply printing and giving hundreds of billion of dollars to the companies. This was a win win win lose (big time) proposition. The politician won because this got lots of votes for them, the companies won because they were saved from the bankruptsy that would ordinarily have resulted from their incompetence, the taxpayers won because the action (supposedly) made our recession less severe than it would have otherwise been. Our grandchildren lost (big time) because they will need to pay the bill for the bailout,
The experiment will show whether these (incompetent) senior executives will go elsewhere when their income is slashed by 90 percent. Of course, the experiment will be impacted by actions of politicians to insulate those contributing to reelection campaigns, companies finding work arounds enabling them to continue rewarding incompetence, and other factors that we do not yet know of.
I think it is ridiculous that executives are still being paid such a substantial amount even after being issued bailout money. I find it interesting that these execs think they are entitled to all this money when they were not even able to make their company more successful. While this is happening, thousands of other people are losing their jobs and ultimately money. The top execs still are able to make money off the company, despite how many other people are suffering.
I don't disagree with you hok917, however, I question whether our government should be the definer of what is correct compensation. Slippery slopes get really dangerous when they are covered with ice and at an incline of 60 degrees or more. President Obama may well be an incredibly honest and humble man who only wishes for the best for all parties concerned. Can we guarantee that his successor in three or seven years will be the same because that person will inherit every aspect of the power that is now being placed in the hands of our government.
Yeah, I think the senior executives can do without a few luxuries while the economy recovers. Still, I think the government should be able to step in, but only under the most extreme of circumstances. I'm no fan of dictatorship, but at the same time someone needs to tell these execs that they are wasting money. Who better to do so then the government that gave them the money they are burning on themselves?
