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Thread: econmics: Is it fair to limit banks excutive comensation to 500k?

  1. #1

    Default econmics: Is it fair to limit banks excutive comensation to 500k?

    US government just limit the executive compensation to 500k.... his logic is that "What gets people upset - and rightfully so - are executives being rewarded for failure, especially when those rewards are subsidised by US taxpayers,"

    I dun get it. I thought all those people who made all the mistakes (2-4 years back) are all gone. Most of the banks has new CEOs who just got on board in the past year....

    The new poilcy is punishing these new guys who are trying to right the disaster left behind by all those previous CEOs who took/con away all the money. 500k/annum to run citibank????? I think that is less that some of the admin staff we have in singapore

    Crazy lah. They should spend some effort in trying to claw back some money from those people who was in charge 2-4 years ago.

    Examples, Merill lynch: Stan Oneal + citibank: Charles Prince both run away in Nov 2007 after years in charge during the fake boom times.
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  2. #2

    Default Re: econmics: Is it fair to limit banks excutive comensation to 500k?

    PS, THIS IS NOT ABOUT POLITICS.....

    it is a discussion whether it is a SOUND economic policy. Can a 500k carrot enough to entice people who can steer entities like citigroup out of financial trouble?

  3. #3

    Default Re: econmics: Is it fair to limit banks excutive comensation to 500k?

    Maybe those guys get more stock options to make up. And maybe the present guys are being punished for the future disasters they will be creating.

  4. #4
    Senior Member sammy888's Avatar
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    Default Re: econmics: Is it fair to limit banks excutive comensation to 500k?

    Quote Originally Posted by pisduck View Post
    PS, THIS IS NOT ABOUT POLITICS.....

    it is a discussion whether it is a SOUND economic policy. Can a 500k carrot enough to entice people who can steer entities like citigroup out of financial trouble?
    I think you have misread the condition for why Obama is proposing this. He is not saying ALL. Okay firstly he is not saying just the top CEO. He is looking at like the top 10 or 20 Executive in the ladder would be told to do so. And if they are allow to get more higher salaries, they have to propose this and declare this to the board of directors for their vote to allow it or not.

    Now getting back to the heart of the issue. He is only make companies that ASK THE GOVT FOR A A BAILOUT. This is going to be one of the condition for asking the govt bailout. If you want to ask for money then make sure you are doing so to save the company not take more bailout money to reward yourself. If you are taking on the job as you say at this time knowing that the company is heading to broke-city, you are coming in not for the money BUT to save it so... if you take the bailout money from the govt then you will have to agree to take a cap-off pay of no more then 500K. As soon as you can replay that bailout money back to the govt then you can reward yourself with fat check for all they care. I thought that was what this is about. This is not something Obama is trying to force every captain of industry to do so.

    Correct me if I am wrong but too tired to read it. I read it this morning and I thought this was a damn good solution and it also promote good image building for the company and the executives too on the long run with the general population of the US. Obama is trying to cut away that concept of "golden Parachute" I mean really.. you screw up and lost so much money for the company and you get booted for it, you should add insult to injury by giving him a fat bonus bye bye compensation for his "frag-up"??? That is what has been happening for a number of years.
    Last edited by sammy888; 5th February 2009 at 10:48 PM.

  5. #5

    Default Re: econmics: Is it fair to limit banks excutive comensation to 500k?

    How can like that...the CEO of Lee-Man Brudders got total of US$500m (i.e. Half a BILLION, i.e. more money than you can count in your lifetime if you count 10 numbers a second).

    Suddenly he say my company burst and in order for us garrment to help, but can only take Us$500,000. It's like...if cashier used to take in S$10,000 a year, now asked to take onlly S$10 a year! How to survive?

    Gosh, have to trade their LamBaGeeNee for Mercedes! That's too cruel. Too cruel...Too cruel...

  6. #6

    Default Re: econmics: Is it fair to limit banks excutive comensation to 500k?

    Quote Originally Posted by sammy888 View Post
    I mean really.. you screw up and lost so much money for the company and you get booted for it, you should add insult to injury by giving him a fat bonus bye bye compensation for his "frag-up"??? That is what has been happening for a number of years.
    The point is that those people who lost the BILLIONS are already gone? They were paid MILLIONS and took their money and gone. Now what is left is a mess and they need someone strong and talented to lead them out of the mess...

    The current CEOs of all the banks never lost that much money I think. The problem is create by the former CEOs.

    The root of the problem does NOT lies in the AMOUNT of compensation but rather the myopia of wall street. People are rewarded and punished based on very short term results. U do well this quarter, u get millions. nobody cares about what happens years down the roads. Similarly, u make losses this quarter, your pay get cut to 500k. This I think just makes the matters worse not better. U are just telling those executives, nobody cares what happens 2-4 years down the road...

    Why did you think those banks took all those crazy risks in the past years? U think they did not know that those people will not be able to pay the mortgages a few years down the road? They did but they just did not care as they would have earned enough money to last time a lifetime. Nobody cared. The shareholders did not as the shares were going up.

    They should CHANGE the way their performance is benchmarked, not how much they are paid.
    Last edited by pisduck; 6th February 2009 at 07:13 AM.

  7. #7
    Senior Member azul123's Avatar
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    Default Re: econmics: Is it fair to limit banks excutive comensation to 500k?

    Quote Originally Posted by pisduck View Post
    The point is that those people who lost the BILLIONS are already gone? They were paid MILLIONS and took their money and gone. Now what is left is a mess and they need someone strong and talented to lead them out of the mess...
    On the flip side, we don't want bank's executives to reward themselves unlimited right? what, iirc one bank lost $18Bil and $4Bil was from bonuses? makes no sense.

    I do agree with your point that this might cause an exodus of good people, but from the gov pov they have right to recover their money first when they injected money into these banks.

    And when they see these executives making large purchases (private $50mil jet) when they already had 5 existing jets, any gov with right mindsight should stop excessiveness during these bad times.

    ../azul123
    Last edited by azul123; 6th February 2009 at 07:42 AM.

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    Senior Member azul123's Avatar
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    Default Re: econmics: Is it fair to limit banks excutive comensation to 500k?

    Quote Originally Posted by pisduck View Post
    The root of the problem does NOT lies in the AMOUNT of compensation but rather the myopia of wall street. People are rewarded and punished based on very short term results. U do well this quarter, u get millions. nobody cares about what happens years down the roads. Similarly, u make losses this quarter, your pay get cut to 500k. This I think just makes the matters worse not better. U are just telling those executives, nobody cares what happens 2-4 years down the road...

    Why did you think those banks took all those crazy risks in the past years? U think they did not know that those people will not be able to pay the mortgages a few years down the road? They did but they just did not care as they would have earned enough money to last time a lifetime. Nobody cared. The shareholders did not as the shares were going up.

    They should CHANGE the way their performance is benchmarked, not how much they are paid.
    This one a agree... If I was made CEO and the way I am rewarded is based on the profits made, I will plan for all the high returns and that means all the high risks, after my term is up that means it is not my problem anymore.

    This is where the system is not working.

    ../azul123

  9. #9
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    Default Re: econmics: Is it fair to limit banks excutive comensation to 500k?

    i think is fair given the situation now, especially for those companies that specially asked for a government bailout, heard one of the companies even wanted to purchase a private jet after receiving the bailout.

    performance rated incentive would be a viable option at the moment, but i think that only happens for ppl on the mid and junior levels.
    ppl who work up to senior levels seems to be exempted from this
    the finance sector got lots of cleaning up to do.
    Last edited by Simon_84; 6th February 2009 at 10:50 AM.

  10. #10

    Default Re: econmics: Is it fair to limit banks excutive comensation to 500k?

    "Change is coming..." and Change has to start somewhere. And it is starting now.

  11. #11

    Default Re: econmics: Is it fair to limit banks excutive comensation to 500k?

    Quote Originally Posted by pisduck View Post
    US government just limit the executive compensation to 500k.... his logic is that "What gets people upset - and rightfully so - are executives being rewarded for failure, especially when those rewards are subsidised by US taxpayers,"

    I dun get it. I thought all those people who made all the mistakes (2-4 years back) are all gone. Most of the banks has new CEOs who just got on board in the past year....

    The new poilcy is punishing these new guys who are trying to right the disaster left behind by all those previous CEOs who took/con away all the money. 500k/annum to run citibank????? I think that is less that some of the admin staff we have in singapore

    Crazy lah. They should spend some effort in trying to claw back some money from those people who was in charge 2-4 years ago.

    Examples, Merill lynch: Stan Oneal + citibank: Charles Prince both run away in Nov 2007 after years in charge during the fake boom times.
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    Onli apply to those CEOs who ask for tax payer money?

  12. #12

    Default Re: econmics: Is it fair to limit banks excutive comensation to 500k?

    Quote Originally Posted by pisduck View Post
    US government just limit the executive compensation to 500k.... his logic is that "What gets people upset - and rightfully so - are executives being rewarded for failure, especially when those rewards are subsidised by US taxpayers,"
    the logic is flawed.

    so in good times, salary will be adjusted up? and in bad times, salary adjusted down? using this reasoning, and the assumption (or fact, as some people see it) that high pay does attract talent, particularly in a highly competitive sector.. this is a good measure of ensuring that it all trickles into a downhill situation more often than not.

    it is alright to modify salary according to how the wind blows. but using this as a reason is not very convincing.

    personally, it is just vote buying. we can tout change all we want, but a politician remains a politician.
    Last edited by night86mare; 9th February 2009 at 08:20 AM.

  13. #13

    Default Re: econmics: Is it fair to limit banks excutive comensation to 500k?

    Good on Obama - grr banks that take tax payer's money to put into their pockets $%&&%^

    In the UK, Royal Bank of Scotland has had a govt handout.....and want to give their execs bonuses:

    http://news.bbc.co.uk/1/hi/business/7877161.stm

    Also Northern Rock who would have died without govt intervention gave their employees bonuses: http://business.timesonline.co.uk/to...cle5561473.ece

    It's a real slap in the face to taxpayers and the 100s of thousands now unemployed. The UK govt needs to make Obama's legislation as well but think too scared! What a mess
    Running for conservation and ACRES. Donate at http://www.acres.org.sg/donate.html

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    Moderator ortega's Avatar
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    Default Re: econmics: Is it fair to limit banks excutive comensation to 500k?

    if I were broke and had no money to feed my family
    and i wanted you to help me with a loan to upgrade my camera

    not forgetting that you are also trying to stay afloat and yourself putting off non vital expenses
    would you lend it to me, knowing that i can't pay you back due to my lavish spending?

    also that it is not your money that you will be lending
    Last edited by ortega; 9th February 2009 at 08:40 AM.

  15. #15

    Default Re: econmics: Is it fair to limit banks excutive comensation to 500k?

    Wah if us$500,000 then all the top bank ceos will want to apply to be ceos of the Singapore banks instead!

  16. #16

    Default Re: econmics: Is it fair to limit banks excutive comensation to 500k?

    Quote Originally Posted by Lady Ice View Post
    Good on Obama - grr banks that take tax payer's money to put into their pockets $%&&%^

    In the UK, Royal Bank of Scotland has had a govt handout.....and want to give their execs bonuses:

    http://news.bbc.co.uk/1/hi/business/7877161.stm

    Also Northern Rock who would have died without govt intervention gave their employees bonuses: http://business.timesonline.co.uk/to...cle5561473.ece

    It's a real slap in the face to taxpayers and the 100s of thousands now unemployed. The UK govt needs to make Obama's legislation as well but think too scared! What a mess
    Just dont understand how the system works??????? Beggers can have bonus!!!!!

  17. #17
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    Default Re: econmics: Is it fair to limit banks excutive comensation to 500k?

    We're all screwed. LOL!

  18. #18

    Default Re: econmics: Is it fair to limit banks excutive comensation to 500k?

    I think there is a difference between lavish spending and compensation.

    I think nobody will begrudge companies cutting down on unecessary expenses like designer garbage bins BUT limiting compensation to USD500k??

    I mean if you are a REALLY talented guy who is capable of leading companies like CITIBANK, would u want to take up the job of a CEO in Citibank, where u have to clear up this MASSIVE amount of "****" left over by the previous CEO, and keep reporting losses in the next few quarters (through no fault of yours), under intense public scrutiny and outcry over everything you do and to top it all, for what???? 75% less pay than your previous job???

    there isn't logic in it, is there? U pay the guy who screwed up the financial system MILLIONS and now you are trying to pay 10% of that to the guy who is supposed to fix it?

  19. #19
    Moderator ortega's Avatar
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    Default Re: econmics: Is it fair to limit banks excutive comensation to 500k?

    i would think the CEO would be smart enough to see the big picture
    and do not need the man on the street to help him think

  20. #20
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    Default Re: econmics: Is it fair to limit banks excutive comensation to 500k?

    Quote Originally Posted by pisduck View Post
    I think there is a difference between lavish spending and compensation.

    I think nobody will begrudge companies cutting down on unecessary expenses like designer garbage bins BUT limiting compensation to USD500k??

    I mean if you are a REALLY talented guy who is capable of leading companies like CITIBANK, would u want to take up the job of a CEO in Citibank, where u have to clear up this MASSIVE amount of "****" left over by the previous CEO, and keep reporting losses in the next few quarters (through no fault of yours), under intense public scrutiny and outcry over everything you do and to top it all, for what???? 75% less pay than your previous job???

    there isn't logic in it, is there? U pay the guy who screwed up the financial system MILLIONS and now you are trying to pay 10% of that to the guy who is supposed to fix it?
    there is a chinese saying... 前人种树,后人乘凉。

    apparently, what's happening now is the reverse... its like the old bunch of people cut off the trees and now the descendants are feeling the impact of deforestation.

    so you think there is going to be a superman to just say, oh great, let me take up the challenge and make the whole thing right just by saying? no...

    so when you think that those who can lead will be better off just relaxing and like the previous CEOs, who only cares about their livelihood and greed, just heck care about what's happening and everyone just say, let the whole economy collapse, as long as i have money in my bank, i have assets... then i think seriously, they're just good for their short term gains, not looking at long term goals. Just imagine one day the inflation is so high that money loses its value, people loses their motivation... thats when the real nightmare starts.

    and imagine this... if a bank like Citibank have only the financial ability to sustain for maximum 2 months, and can only give compensation of 200k for the CEO, what should the bank do? close down and heck to those who have their savings and investments in Citibank, or just let the next competent one get a pay cut to 200k, hope that he can get the job done, at least its the best they could do. which would you prefer?

    but of course the issue is about obama setting a limit to the banks, yes... its kinda iron handed. but look at it, they're paid an obscene amount. obama can't take those who have taken a large amount of renumeration to court and force them to regurgitate back into the economy. what obama can do is set a new example of precedence that will keep these obscene acts in place. Greed is what he is probably trying to stamp out. By capping the maximum withdrawal, these CEOs won't be trying to create highly risky and bubble like figures to affirm their rights to high bonuses and high renumerations.

    come to think about it, i don't think anyone of them are saints who would be willing to stay on with the tide, so its probably a good opportunity to see some new blood take up the lead and push the economy back up to where it used to be. Altruism.
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