U.S. Said to Order Deep Pay Cuts at Bailed-Out Companies

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U.S. Said to Order Deep Pay Cuts at Bailed-Out Companies
Published: Wednesday, 21 Oct 2009 * 2:36 PM ET Text Size By: Stephen Labaton
The New York Times
Responding to the growing furor over the paychecks of executives at companies that received billions of dollars in the government’s financial rescue, the Obama administration will order the companies that received the most aid to deeply slash the compensation to their highest paid executives, an official involved in the decision said on Wednesday.


AP
Kenneth Feinberg
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Under the plan, which will be announced in the next few days by the Treasury Department, the seven companies that received the most assistance will have to cut the annual salaries of their 25 best-paid executives by an average of about 90 percent from last year. Their total compensation — including bonuses and retirement contributions — will drop, on average, by about 50 percent. The companies are Citigroup [C 4.49 0.06 (+1.35%) ], Bank of America [BAC 16.7618 -0.2482 (-1.46%) ], American International Group [AIG 39.51 -0.92 (-2.28%) ], General Motors, Chrysler and the financing arms of the two automakers.

At the financial products division of the insurance giant, A.I.G., the locus of problems that plagued the large insurer and forced its rescue with more than $180 billion in taxpayer assistance, no top executive will receive more than $200,000 in total compensation, a stunning decline from previous years in which the unit produced many wealthy executives and traders.


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In contrast to previous years, an official said, executives in the financial products division will receive no other compensation, such as stocks or stock options.

And at all of the companies, any executive seeking more than $25,000 in special perks — such as country club memberships, private planes, limousines or company issued cars — will have to apply to the government for permission. The administration will also warn A.I.G. that it must fulfill a commitment it made to significantly reduce the $198 million in bonuses promised to employees in the financial products division.

The pay restrictions illustrate the humbling downfall of the once proud giants, now wards of the state whose leaders’ compensation is being set by a Washington paymaster. They also show how Washington in the last year has become increasingly powerful in setting corporate policies as more companies turned to the government for money to survive.

The compensation schedules set by Kenneth R. Feinberg, the special master at Treasury handling compensation issues, comes as many other banks that received smaller but significant taxpayer assistance in the last year have been reporting huge year-end bonuses, setting off a new round of recrimination in Washington about bailout of Wall Street.


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Since his appointment last June by Treasury Secretary Timothy F. Geithner, Mr. Feinberg has spent months in negotiations with the companies as he seeks to balance compensation concerns against fears at the companies that any huge restrictions in pay could prompt an exodus of executives. Under a law adopted earlier this year, the Treasury Department was instructed to examine the salaries and bonuses for the five most senior executives and their 20 most highly paid employees at companies that have received extraordinary assistance.

Mr. Feinberg has already achieved significant results at several companies. As a result of his discussions, Kenneth D. Lewis, the head of Bank of America who recently was ousted, agreed to forego his salary and bonus for 2009. (He will still receive a pension of $53.2 million, although Mr. Feinberg can issue an advisory opinion challenging it that would carry political weight.) And fearful of a political backlash over the pay of Andrew J. Hall, a successful energy trader who received nearly $100 million last year, Citigroup agreed two weeks ago to sell its Phibro unit that Mr. Hall heads to Occidental Petroleum
:good4u:
 
I'm glad they're putting limits on it. Employer compensation seems to be one of those "race to the bottom" things that the market naturally produces with negative economic value. Limiting them does not hurt the market over all.
 
Who is dumber than meme on economics here?
I love the decision, I'd like to see a way to hammer almost all CEO's top execs and boards. Shareholders are getting fucked without a reacharound.
 
Who is dumber than meme on economics here?
I love the decision, I'd like to see a way to hammer almost all CEO's top execs and boards. Shareholders are getting fucked without a reacharound.

simple question topspin.....if shareholders get screwed by the ceo and board, wouldn't a better solution be to prosecute for any criminal activity or to simply not invest in the company at all?

investment is supposed to be a risk v. reward type thing, correct?
 
simple question topspin.....if shareholders get screwed by the ceo and board, wouldn't a better solution be to prosecute for any criminal activity or to simply not invest in the company at all?

investment is supposed to be a risk v. reward type thing, correct?

Your 100% correct. Here's my point. Boards and CEO's scratch each others backs. CEO makes millions, board members get a couple hundred grand to attend quarterly meetings and review the occasional proposal.

Fuck that

That said stocks still remain the best avenue for poor people to get rich.:cof1:
 
Your 100% correct. Here's my point. Boards and CEO's scratch each others backs. CEO makes millions, board members get a couple hundred grand to attend quarterly meetings and review the occasional proposal.

Fuck that

That said stocks still remain the best avenue for poor people to get rich.:cof1:

so you're endorsing the 'you scratch mine, i'll scratch yours' scheme, so long as the shareholders make money, but also endorsing the removal of said scheme? i'm not understanding that ideology.
 
The New York Times
Responding to the growing furor over the paychecks of executives at companies that received billions of dollars in the government’s financial rescue, the Obama administration will order the companies

all hail the Hugo Obama..
 
so you're endorsing the 'you scratch mine, i'll scratch yours' scheme, so long as the shareholders make money, but also endorsing the removal of said scheme? i'm not understanding that ideology.

I'm ranting against it, wtf dude pay attention

I don't have an easy answer to stop it. England has more shareholder rights which I think gives them say over executive pay.
I'm for anything that gives shareholders more rights.:clink:
 
Don't fall for the okey-doke.

This plan is NOW being pushed, not only by the furor COMING FROM THE LEFT .. the right thinks like meme .. but it's being trotted out NOW because of the coming investigations over this ...

Geithner, Summers Endorsed Dubious Bank of America-Merrill Lynch Deal

Bush administration officials have been under fire for effectively forcing a merger last December between Bank of America and Merrill Lynch without informing BoA shareholders of the financial dire straights Merrill was in at the time.

But yesterday the Obama administration was pulled more deeply into the scandal as well, after newly unveiled BoA documents suggested that both incoming Treasury Secretary Tim Geithner and incoming senior economic adviser Larry Summers had endorsed the merger as well

-- more at link
http://washingtonindependent.com/64...ed-dubious-bank-of-america-merrill-lynch-deal

Smoke and mirrors .. wake up people.
 
Your 100% correct. Here's my point. Boards and CEO's scratch each others backs. CEO makes millions, board members get a couple hundred grand to attend quarterly meetings and review the occasional proposal.

Fuck that

That said stocks still remain the best avenue for poor people to get rich.:cof1:

who gives a flying fuck what you think....unless you're a SH, you can stfu as it doesn't concern you
 
this is so stupid....you libs make wallstreet execs the boogeyman while sports stars, entertainers make millions more and not a peep about that

we have a RIGHT to attend live sporting events, if the superstars weren't paid so much we could all AFFORD the tickets.....
 
I'm ranting against it, wtf dude pay attention

I don't have an easy answer to stop it. England has more shareholder rights which I think gives them say over executive pay.
I'm for anything that gives shareholders more rights.:clink:

ok, i get it then. you're against it. thats cool.

here's something to think about though. If instead of zealously prosecuting those executive criminals and not only completely removing any profit from their crime (andrew fastow comes to mind) but having them forfeit every single piece of material wealth they own legitimately and then imprisoning them for a long period of time, we simply make a law that limits certain forms of income...won't those same crooks just imagine up new ways of shifting investment capital to continue robbing shareholders?
 
this is so stupid....you libs make wallstreet execs the boogeyman while sports stars, entertainers make millions more and not a peep about that

we have a RIGHT to attend live sporting events, if the superstars weren't paid so much we could all AFFORD the tickets.....



.......and if healthcare/pharma execs took less money, more people would be able to afford care of their family's health.
 
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