Obama Caps Executive Pay At $500,000
Only for companies that took bailout money, but you can bet there will be efforts to use this precedent to dictate the compensation of private employees in the future.
President Barack Obama on Wednesday imposed a $500,000 cap on senior executive pay for the most distressed financial institutions receiving taxpayer bailout money and promised new steps to end a system of “executives being rewarded for failure.”
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The limit would apply to top-paid executives at the most distressed financial institutions that are negotiating bailout agreements with the federal government.
It also would apply to other banks that receive aid, but they could get around the limits by publicizing to shareholders plans to exceed the salary cap.
Proof that Obama and his fellow liberals don’t plan just to stop with the companies that took bailouts:
The administration also will propose long-term compensation restrictions even for companies that don’t receive government assistance, Obama said.
Those proposals include:
• Requiring top executives at financial institutions to hold stock for several years before they can cash out.
• Requiring nonbinding “say on pay” resolutions — that is, giving shareholders more say on executive compensation.
• A Treasury-sponsored conference on a long-term overhaul of executive compensation.
Sounds ominous to me. Obama can get away with the cap he just signed today because, well, not a lot of people have any sympathy for the companies that took bailouts. They through themselves on the mercy of the government, and now they’re paying the price for inviting the government into their boardrooms. What they’re going to get is more meddling, more regulation and overall just plain more government control.
And to some extent, Obama probably can cap executive pay at bailed out companies to the extent that he can tie pay requirements to the TARP money. When you take government money you get the strings attached to that money as well. But how in the world is it going to be Constitutional for Obama to start dictating pay to private companies that have taken no bailout money at all?
While the class warriors may be salivating at the idea of punishing all those nasty over-achievers who have earned more than they have, do we really want to live in a country where the government can dictate to us how successful we can be?
What the employees of a given company – up to and including executives – get paid should be the business of the owners of that company. Whether the owner be an individual or stock holders or what have you.
It shouldn’t be up to the government to decide how much private sector employees get paid.
