New Proposals on Executive Comp = Not a Lot of Money

As you’ve guessed by now, I’m fascinated with the money big dogs make. I’ve readily admitted that if offered $5 or $15 or $100 million for a year’s work, I’d take it, so perhaps I’m just jealous. In this regard, a couple of articles (one in the New York Times and the other in the Washington Post) caught my eye today.

The Times reports that the Obama administration is expected to impose a cap of $500,000 on executive compensation for companies receiving large amounts of bailout money. The managing director of a compensation consulting firm (it tells boards of directors how many millions they should pay their executives) is quoted as being critical of this proposal: “That is pretty draconian — $500,000 is not a lot of money, particularly if there is no bonus.”

It’s not surprising that the consultant would say that. He has lived in a small world of wealthy executives and has helped make them more wealthy. That world is having a hard time comprehending what has happened recently, which brings me to the article in the Post.

“Tom Daschle still doesn’t get it. John Thain never did. Barack Obama gets it sometimes, Nancy Pelosi and John Boehner not so much. Corporate executives think they get it but aren’t even close. College presidents, governors and union leaders, for the most part, don’t have a clue. ‘It’ is an understanding of how fundamentally the political and economic environment has been transformed with the bursting of the bubble economy and how that has jeopardized basic assumptions and expectations and the way we do what we do.”

Of course, $500,000 is a lot of money to a huge percentage of workers in this country. Maybe, it’ll start becoming a lot of money to executives and compensation consultants.

1. 

   Scott Robinson says:

   February 9, 2009 at 10:59 am

   at least we are not asking them to pay back their 200 million dollar retirement package ….
2. 

   Private says:

   June 20, 2009 at 1:51 pm

   Interesting..