An editorial “A troubling level of gov’t control” states “The Treasury Department ordered the seven companies to slash the cash salaries for their 25 highest-paid executives by 9 percent. Total compensation—salaries, benefits, stock options—for the top executives will decline by about 50 percent….In addition, the pay restrictions for all seven companies requires any executive seeking moreo than $25,000 in perks—country club memberships, private planes, company cars—to get permission from the government.”
The Wall Street Journal reports: “As expected, Treasury official Kenneth Feinberg said cash salaries paid to the highest-earning executives at seven companies getting exceptional federal aid will be capped at $500,000, while the group’s total pay level, annualized, will be 50% lower than a year before.”
WATCHDOG: The advantage of long drives is they allow the Watchdog to listen to the Congressional hearings on C-SPAN radio.
As the New Era points out, the restrictions only apply to the seven companies in which the tax payers have made huge investments and, in many if not all cases, are the majority stock holders. We see nothing anti-capitalistic about that.
Equally important, the government isn’t trying to reduce total compensation over the long run. Rather, the government is insisting that time be allowed to pass to determine whether deals made are actually profitable before huge commissions and bonuses are given out. This is to be done through delayed compensation plans.
Both Republicans and Democrats express concerns about the ‘moral hazard’ problem, whereby if things go right, the corporate executives win; but when things go wrong, they still keep their huge commissions and bonuses, and the tax payers are stuck with the loss.