Tuesday, September 30


I am tired of many bogusities, but there is one in particular that has been bothering. This complaint about executive pay. That in any bail out program we would require limits on executive pay. Because all these companies need billions of dollars, and the government is proposing 700 billion dollars to help them out, so obviously the 25 million the CEO paid himself this past year is the problem. If only he hadn't paid himself that 25 million dollars we wouldn't be having this problem.

I agree that people at the top of companies are often unfairly compensated. They get locked into huge paydays regardless of the performance of the company. they can, and do drive the companies into the ground, costing employees their jobs, stock portfolios, and pensions. And that sucks. But those same executives would be driving their companies into the ground regardless of their own salaries. It is certainly not fair, but who said life is fair, where is that written? It's up to companies/board of directors, whomever to limit the pay they offer to their executives. The problem is that everyone wants to find an executive like steve jobs, without whom apple computers would probably be gone by now. They literally couldn't pay him enough, because he completely turned around that company. It's not the government's place to mandate what companies pay their executives, nor will it be the savior of the economy. it just sounds good to bunch of people who are having a tough time in this economy and find it easy to hate executives who made a lot of money while their company went under.

a related theory is that we can't bail out companies because then they won't learn from their mistakes. Is anyone really that stupid? Does anyone really think that in a few years all these companies will be clamoring to to buy a bunch more subprime mortgages. If nothing else look at the executives of these companies. I don't remember the exact numbers, but the bear stearns chief had stock worth upwards of 2 billion, and after the government "bailed" them out, his stock was worth like 60 million. Some people might say 60 million is still a lot of money, but it's a lot different then 2 billion. Nobody is going to be going into their meetings saying, this is a little risky, but hell, if it doesn't work out the government will take 80 percent of our company, or else help sell us to another company at 5% of our previously value. That's a hell of a bail out.


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