U.S. to Order Steep Pay Cuts at Firms That Got Most Aid

[Pirate Smile]

Source: New York Times

WASHINGTON — Responding to the growing furor over the paychecks of executives at companies that received billions of dollars in federal bailouts, 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.

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 cash payouts to their 25 best-paid executives by an average of about 90 percent from last year. For many of the executives, the cash they would have received will be replaced by stock that they will be restricted from selling immediately.

And for all executives the total compensation, which includes bonuses, will drop, on average, by about 50 percent.

The companies are Citigroup, Bank of America, the American International Group, General Motors, Chrysler and the financing arms of the two automakers.
At the financial products division of 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


Read more: http://www.nytimes.com/2009/10/22/business/22pay.html?_r=1&hp

[Captain Hilts]

1. Good on 'em!

[AndyA]

2. You know what's sad about this?

That top executive at AIG will think that $200,000 is nothing.

But to most people, a $200,000 annual salary would be pretty fine.

Pigs, every last one of them. They should be fired and sentenced to hard labor for the remainder of their lives. They caused this disaster, they should pay for it instead of being rewarded with a $200,000 salary!

Better than nothing, though. And a step in the right direction.

[safeinOhio]

5. That's not salary

it's bonus pay outs..

[whosinpower]

3. Can he do that?

I am just wondering. I think it is a great idea, and well overdue - but can he do that on his own, or will he have to go through congress and the senate to get this done? If he does, then it will not happen.

[girl gone mad]

7. I really doubt it will get done.

Too many obstacles.

[Oldtimeralso]

4. $200,000...

That is not even half a days worth of United H(W)ealthcare CEO compensation!
If his salary were cut like that and mine were cut proportionately I would make about $35.00/YEAR.

[Journeyman]

6. I'm an investor -- hell, I'm an OWNER -- and I approve this cost-saving measure. . .

and when they've repaid the money we gave them and/or consent to greater oversight of their operations, we can discuss their getting a raise.

[GETPLANING]

8. And boy,,, are they pissed

News just hit the wire that the Obama administration plans to order that the top earners at firms which received billions of dollars in government bailouts will see their cash payouts cut by an average of about 90 percent from last year. I watched the tape turn red as the trading floors were given their orders from the top. The masters of the universe are registering their displeasure, that’s for sure. Go to Yahoo! Finance and look at today’s chart for the S&P. It’s still plunging as I type.

[Lucky Luciano]

34. The timing was pretty impressive actually with the move down

in the markets, but the real mover was a downgrade by R Bove of Wells Fargo to sell - that totally spooked the markets. I absolutely noted what you said though - it was amusing. A freind shot me a Bloomberg email and said, "WHat is this leg down?" I mentioned the WFC downgrade and this paycut news item for the big 7 losers. It was almost to the minute that the article came out about comp limits that the market tanked! lol

[debbierlus]

9. Not nearly enough. FIRE them.

Why are the criminals who created this disaster STILL in their jobs?

They just upped their damn bonuses 40% over last year, so what they will get 90% of what they go last year?

Wtf?

You are still talking millions upon millions.

[Hell Hath No Fury]

10. That's nice.

Now regulate the damned industry and put in some laws with TEETH and then we're talking!

[Thrill]

11. Wall Street responds by sinking the DOW

Go check it out

[closeupready]

14. Only so many times they can play that game

Before they tap out their resources.

[boomerbust]

12. This was announced on CNBC

At the time the DOW was up 30 but by the end of the day it was -95. As you can see who is running this country's finances. These morons are like two year olds having a tantrem.

[closeupready]

13. This is good, but it doesn't go far enough, IMO.

Finance should be a minor part of the economy, as Krugman wrote.

[kpete]

15. U.S. to Order Steep Pay (90%) Cuts at Firms That Got Most Aid

Source: New York Times

U.S. to Order Steep Pay Cuts at Firms That Got Most Aid

By STEPHEN LABATON
Published: October 21, 2009

WASHINGTON — Responding to the growing furor over the paychecks of executives at companies that received billions of dollars in federal bailouts, 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

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 cash payouts to their 25 best-paid executives by an average of about 90 percent from last year. For many of the executives, the cash they would have received will be replaced by stock that they will be restricted from selling immediately.

And for the 25 best-paid executives, the total compensation, which includes bonuses, will drop, on average, by about 50 percent.

The companies are Citigroup, Bank of America, the American International Group, General Motors, Chrysler and the financing arms of the two automakers.

Read more: http://www.nytimes.com/2009/10/22/business/22pay.html?_r=3&hp=&adxnnl=1&adxnnlx=1256155371-CMKKfo2MCC/zfn3YwxPbcQ

[Tansy_Gold]

16. Is that the top 25 execs in EACH company, or a total of 25 at the seven?

Okay, I'll go read the article now.

[MindandSoul]

24. Not setting maximum salaries, but setting rati betwen the lowest and highest pay employees

We may not be able to set salaries. . .but how about setting an acceptable ration between the lowest paid full time worker in a company and his/her highest paid worker?

I read somewhere that 10 years ago, the ratio for the lowest pay to the highest pay was about 200.
Today, it appears to be over 400! How about setting a ration around 150 to 200?
That is. . .if the lowest paid full time employee made $30,000 a year, the highest paid employee (including CEO) couldn't make more than . . ..$6 million per year???? Doesn't that seem fair enough????

[Myrina]

17. Cash Payouts, not stock options or deferred compensation ...

... sleight of hand, that's all ...

[Beetwasher]

18. Uhh, No

"And for the 25 best-paid executives, the total compensation, which includes bonuses, will drop, on average, by about 50 percent."

Total compensation. Unless somehow deferred compensation is not considered compensation.

[Myrina]

23. Total compensation will drop by 50%, not 90% ...

... like the headline says, referring only to 'cash payouts'.

[laughingliberal]

19. Nope. Paying them in stock which they are restricted from selling for several years...

prevents the mentality of "this quarter's balance sheet." It puts them in the position of having to keep the companies viable long term instead of using sleight of hand to pump up short term gains, sell their stock and then let the chips fall where they may.

[girl gone mad]

20. Only the top TARP recipients?

What about those who profited from the other $23T we gave away?

[Lucky Luciano]

21. I thought it was $13t last week...

...and giving a $1 debt guarantee is not equivalent to giving $1. The value of that debt guarantee should be based on the change in credit spreads were the guarantee to go away. I don't have a model for that, but I am certain that it is substantially less than $1. I would say it is worth 10 cents, but I am just making that up as I don't know enough to value it properly.

[girl gone mad]

22. $23.7 Trillion in handouts and backstops.

I know you know this.

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=385x391880

[high density]

25. "and backstops"

And what the poster said is that a $1 backstop is not $1 payout. So no, it's not $23.7 trillion by any honest accounting metric.

[girl gone mad]

27. It's really not that complicated.

We are tying up trillions of dollars in zombie banks. That's money that could be better used elsewhere in the economy. Would GS exist today if it wasn't for these government backstops? No. So why are they exempt from pay restrictions?

And as for the accounting metric, take it up with Barofsky. I happen to agree with him that backstops = money, regardless of the Fed legerdemain involved. These loans and guarantees haven't taken on any mystical properties, that I know of. The funds show up somewhere on the balance sheets. You could argue that it would take a black swan event for us to suffer permanent losses of 23.7 T. That doesn't mean the liquidity isn't real or that there are no detrimental effects to the real economy when Wall Street gambles with this easy money.

[Lucky Luciano]

35. Agreed that backstops are money...just not dollar for dollar.

It is only dollar for dollar if removing the backstop would cause immediate bankruptcy. I cannot be convinced otherwise...but I do think for sure that the backstop = money, but just much less. Funny thing is that if the backstops are taken away, credit spreads will widen for the bank in question and the value of their debt will go down which ironically increases the bank's net income - low quality income (since it involves no cash flow), but income nonetheless.

[Zenlitened]

26. K&R, this is good news. Is it a case of "guvmunt meddling in private business"?

NO!

Because, as the article notes and as we all know, these companies are "wards of the state."

Think of this move as welfare reform for the corporate class.

K&R.

[David Zephyr]

28. Administration Plans Big Pay Cuts at Bailout Firms

Source: AP

WASHINGTON (AP) -- The Obama administration will order U.S. companies that received huge government bailouts last year to slash the salaries of their top executives by an average of 90 percent and cut their total compensation in half, a person familiar with the decision said Wednesday.

The cuts apply to the 25 highest paid executives at the seven companies that received the most assistance, said the person, who spoke on condition of anonymity because the decision has not been announced. Smaller companies and those that have repaid the bailout money, including Goldman Sachs Group Inc. and JPMorgan Chase & Co., are not affected. The Treasury is expected to announce the cuts within the next few days.

Kenneth Feinberg, the special master at Treasury appointed to handle compensation issues as part of the government's $700 billion financial bailout package, is making the pay decisions.

The seven companies are Bank of America Corp., American International Group Inc., Citigroup Inc., General Motors, GMAC, Chrysler and Chrysler Financial.




Read more: http://finance.yahoo.com/news/Administration-plans-big-pay-apf-1242540084.html?x=0&sec=topStories&pos=main&asset=&ccode=

---

Yes!

[CatWoman]

29. *BAM*!!

:)

[David Zephyr]

30. Double Bam!

Ouch! This so rocks!

This is how you do it.

What a day this has been.:)

[CatWoman]

31. David

:hi:

:)

[David Zephyr]

32. What a day, CatWoman.

Pelosi's House Judiciary Committee goes 29-0 to end the exemption for anti-trust insurance providers and now the White House is going to slash the hell out of these executives' pay.

What a day. Who'd have foreseen this 8 years ago?

Big hello to you, too. :hi:

[Vidar]

33. This is a good start.

[tmyers09]

36. Long Overdue.

According to Politico, the decision was made exclusively by the White House's Pay Czar.

http://www.politico.com/news/stories/1009/28596.html

About how long until Glenn Beck's head explodes talking about the czars making decisions, even ones that should have been made even before we gave them the money?

With this along with the end of the antitrust exemption, one can almost feel like at least for one day, our government isn't run by the corporations or Wall Street.