Wednesday, February 4, 2009

How can I live on $500,000 a year?

That's what executives like Bank of America CEO Kenneth D. Lewis (pictured here) must be asking themselves as President Obama reportedly prepares to unveil a $500,000 cap on executive pay for companies that get bailed out. Lewis took home more than $20 million in 2007, according to the New York Times story linked to above.

Tough times for executives! I don't have a clue how they are going to manage, just as I don't have a clue what they find to do with all that money--I guess I am so far out of their league I can't even think what I would do if I had that much, rather than give quite a lot of it away (okay, right, I guess I could, um, invest it--no, that's not a good idea right now--or maybe buy material things with it, like, um, yachts and cars and maybe a big house in an exclusive neighborhood and expensive vacations and lots of meals in top restaurants... oh gosh, I've spent it all already!)

Now for some reaction to this severe step, from the same Times story:

“That is pretty draconian — $500,000 is not a lot of money, particularly if there is no bonus,” said James F. Reda, founder and managing director of James F. Reda & Associates, a compensation consulting firm. “And you know these companies that are in trouble are not going to pay much of an annual dividend.”

Mr. Reda said only a handful of big companies pay chief executives and other senior executives $500,000 or less in total compensation. He said such limits will make it hard for the companies to recruit and keep executives, most of whom could earn more money at other firms.

“It would be really tough to get people to staff” companies that are forced to impose these limits, he said. “I don’t think this will work.”

Maybe Reda is right, and top executives like Lewis won't accept such a big pay cut and will quit and take another job--where? Oh, right, at another company that is doing just fine and doesn't need government bailouts and can afford to pay $20 million a year to its execs. A company like, um, Caterpillar? GM? Ford? Maybe one of those big insurance companies? There's got to be one somewhere that just can't do without the talents of a major exec like Lewis who ran the Bank of America into the ground--my bank, you motherfucker! Where I have been a customer for 40 years as of 2009 and paid enough banking charges over that time to buy Lewis at least one of his Mercedes.

Here's another idea: Let's get some new blood in there to run these companies, some bright, upcoming execs who are public spirited and just want to run these companies for the public good, especially now that we the taxpayers are going to own most of them anyway. On $500,000, they will still be able to send their kids to the best schools and live in nice neighborhoods and drive nice cars and have good European vacations and eat in gourmet restaurants--who could ask for more than that?

Photographer: Stephen Hilger/Bloomberg News

Israeli war crimes in Gaza. The Times reports on moves by human rights groups to investigate violations of international law and pursue prosecutions against Israeli leaders; the Christian Science Monitor looks at how it's all going down in Israel itself (thanks to PG for the latter link.)

Don't mourn for Daschle. So says The Nation's John Nichols, whose online commentary makes it look like this is a blessing in disguise for Obama and the country: "The scandal over Daschle's lavish lifestyle and failure to pay taxes simply emphasized why the former Senate Majority Leader was exactly the wrong choice to serve in the administration of a Democratic president who aspires to make a break with the worst of the compromises that characterized his party during the Bush-Cheney era," Nichols says. Read on.

Internal wrangling in Obama's economic team. With some help from Joe Biden, according to Christopher Hayes in The Nation. Thanks to reg for the heads up.

100,000! That's how many unique visits this blog has now had since I started it last April. Not in the major leagues, I realize, but still not bad--thanks again to all.


Woody said...

So, Obama favors NOT paying the rate that is required to obtain top executive talent to lead corporations employing millions. Well, it will make those suffering from wealth-envy happy, while their companies go under with cheap management. Hey, maybe we should cut the compensation of teachers, as government schools are failures.

Isn't government control of private enterprise a form of fascism?

Where socialism sought totalitarian control of a society’s economic processes through direct state operation of the means of production, fascism sought that control indirectly, through domination of nominally private owners. ...Under fascism, the state, through official cartels, controlled all aspects of manufacturing, commerce, finance, and agriculture. Planning boards set product lines, production levels, prices, wages, working conditions, and the size of firms.

terryt said...

"Isn't government control of private enterprise a form of fascism?"

But has a bailout by the taxpayers anything to do with 'private enterprise'?

"Obama favors NOT paying the rate that is required to obtain top executive talent to lead corporations employing millions".

But hang on. Aren't these 'top executives' the ones who let the economy reach the present situation in the first place? And what's more they expect bonuses for doing it?

Surely the taxpayer bailout marks the end of Capitalism as much as the fall of the Berlin wall marked the end of Communism.

Anne Gilbert said...

Wow! Those poor, poor executives. My heart bleeds. Gee. I can think of a lot of thingsI could do with $500,000 B year. But then, I'm a Starving Writer, not a bank executive.
Anne G

Woody said...

Things worse than highly paid executives are lower paid executives and government.

Richard said...

Expensive management put paid to most US 'investment' banks.

If I was Obama, I would quietly persuade these drongos that they accept salary caps, or wait for the guillotine, (by others).

The USA, for fear of 'socialism' hands out money to these drongos, but refuses to accept any public return from public money donations.

You, Woody, will pay these 'un-cheap' wallies, and get nothing at all back.

Richard said...

On another point on this blog:

Gaza - Israel War Crimes

Just read a bit of this:

A Few Short Updates

and try not to cry.