“That is pretty draconian — $500,000 is not a lot of money, particularly if there is no bonus,” said James F. Reda, founder and managing director of James F. Reda & Associates, a compensation consulting firm. “And you know these companies that are in trouble are not going to pay much of an annual dividend.”
Somewhere in the distance I hear the faint sounds of the world's smallest violin...
1 comment:
All Things Considered had an interview with a compensation consultant the day the pay cap was announced as well. It's mind boggling to listen to this guy talk about how many of these execs may leave these firms if this pay cap is in place and go to non-TARP institutions, which is bad for the bailout because we'll lose talented execs. How talented can they have been if they've brought their banks into this state?!
But honestly, it brings up some more practical questions. A lot of executives lived lifestyles that will not survive on a $500,000 salary. They'll stop spending and have to tap into their savings and possibly sell their houses, which is a lot of lost spending when we need it most. And a lot of non-senior executives made more than $500,000. So do workers now make more than their bosses? These are the questions the NPR consultant was asking. And the problem is, I don't think one can make a logically coherent argument for these pay caps unless we are outright challenging capitalism's market rates for compensation (which, obviously, *I* have no problem doing). But I think the centrist, pro-market Obama administration is just doing some tepid crowd pleasing without addressing the real problems at hand here, which are really that the market is fundamentally unjust and unsustainable. It's hard to see how they're going to be successful or perceived as successful in fighting this recession if they can't even so much as explain that markets fail and they need big government rescuing and the market ideology caused the problem. If you never say that, and your stimulus plan is not built on those assumptions, how can you possibly be effective? Capping executive pay certainly won't fix anything...
Liberal incoherence is so frustrating...
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