Obama restricts Executive pay!

The news is just in and I cannot be happier:  New York Times is reporting that the Obama administration plans to impose a cap of $500,000 for executive pay for any firm that will benefit from the next round of bailout money. This restriction is obviously not retroactive but many of the big banks are expected to come to the well once again given the deepening recession.

Yahoo! News reports, “Administration officials have said that the new restrictions would apply only to those struggling large firms that receive “exceptional assistance,” such as the American International Group Inc., Citigroup Inc., and Detroit automakers. They would not apply to healthy banks that receive government infusions of capital.

And Obama’s chief economic adviser, Larry Summers, has proposed that firms that want to pay executives above a certain threshold would have to compensate them with stock that could not be sold or liquidated until they pay back the government funds.”

On the same day, Obama was brave enough to admit that he made a mistake in nominating Tom Daschle for the Cabinet position — I like the courage in contrition displayed by our Commander-In-Chief. 

Hail the new President!


2 Responses

  1. Yeah, this is a great policy. In these times, the executives cannot justify bonuses for retention. Their companies are barely staying up – where would they go? Where are these other companies that are eager to hire them? It’s just plain greed.

  2. I appreciate the objective behind move, however I feel this might not work to meet the need. You need to keep the best talents to drive those TARP funded companies to recovery path, when those executives may take an exit route and average talent will compromise to take up this tough job. So, I feel the gap between the lowest paid worker and highest paid worked should be narrowed. A a new value based system needs to be established across all the corporates so that executives who are doing responsible jobs should get rewards but those making serious contribution are equally valued. So, if we go down any organization chain the make a realistic lowest wages and assuming 10 fold maximum increase when you go a level up and this way upto 100 levels may be. All I am trying to say the higesht pay should not be limited by a number but by a factor of bare minium which is required at the bottom.

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