I’m traveling for work this week…I woke up in Chicago where it is 1 degree today…and I don’t have too much time to post but I do want to give a quick shout-out to Obama who announced yesterday that he was placing a $500,000 cap on executive salaries at firms receiving federal bail-out money going forward.
The resulting hue and cry has been predictable. People struggling during this economic mess generally applaud the move. People riding on the money train like James F. Reda, founder and managing director of James F. Reda & Associates, a compensation consulting firm, are upset.
Said Reda, “That is pretty draconian — $500,000 is not a lot of money, particularly if there is no bonus. And you know these companies that are in trouble are not going to pay much of an annual dividend.”
Well boo-hoo Mr. Reda. So sorry that you can’t feed you family on paupers wages. $500,000 is not a lot of money?
Since fucking when?
The argument is that capping salaries at “just” $500,000 is going to drive away the talent required to save these companies and turn the economy around. That we should want to do everything we can to secure the best and brightest to run these institutions especially since, as taxpayers, we now own big chunks of them.
That may very well be right. But I would argue that insane executive compensation hasn’t assured us the best and brightest corporate leaders so far. If it did, Bank of America wouldn’t need you and me to give them $25 billion just to keep the lights on.
The best and brightest wouldn’t have continued to purchase corporate jets, sponsor executive junkets and paid $18 billion in bonuses during 2008. These aren’t the brightest, they’re the blindest.
And by the way, where are all the jobs that these assholes going to run to during this great talent-drain? The job market sucks and having cratered a major investment house doesn’t exactly make for a glowing entry on the old resume.
What this cap will do is separate the honorable from the jackals. It will create a long-overdue culling of the corporate heard. The great leaders will rise to the occasion, take on the challenge, win in the marketplace and reap the benefits of their success.
The jackals will crawl into their holes in the Hamptons and hide while the real greats clean up their mess.