http://www.nytimes.com/2009/10/22/business/22pay.html?ref=global-home
All,
While this band-aid measure by the government will in itself do very little to address the far bigger problem of seriously regulating and controlling the financial sector it is a small step in the right direction. However, for this directive to have any real impact in establishing genuine public control of the banking industry and Wall Street it must be followed up by new strong regulatory laws imposed by the federal government and broad social democratic demands by American citizens that insist on telling the robber baron financial sector of the U.S. economy what to do and how to do it for a change as opposed to the other way around...So both we and the Obama administration still have a very long way to go to establish true justice and democracy in the economy...
Kofi
October 22, 2009
U.S. to Order Steep Pay Cuts at Firms That Got Most Aid
By STEPHEN LABATON
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 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.
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 compensation, a stunning decline from previous years in which the unit produced many wealthy executives and traders.
In contrast to previous years, an official said, executives in the financial products division will receive no other compensation, like stocks or stock options.
And at all of the companies, any executive seeking more than $25,000 in special perks — like 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 the bailout of Wall Street.
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 resigned, agreed to forgo 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.
Copyright 2009 The New York Times Company
All,
While this band-aid measure by the government will in itself do very little to address the far bigger problem of seriously regulating and controlling the financial sector it is a small step in the right direction. However, for this directive to have any real impact in establishing genuine public control of the banking industry and Wall Street it must be followed up by new strong regulatory laws imposed by the federal government and broad social democratic demands by American citizens that insist on telling the robber baron financial sector of the U.S. economy what to do and how to do it for a change as opposed to the other way around...So both we and the Obama administration still have a very long way to go to establish true justice and democracy in the economy...
Kofi
October 22, 2009
U.S. to Order Steep Pay Cuts at Firms That Got Most Aid
By STEPHEN LABATON
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 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.
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 compensation, a stunning decline from previous years in which the unit produced many wealthy executives and traders.
In contrast to previous years, an official said, executives in the financial products division will receive no other compensation, like stocks or stock options.
And at all of the companies, any executive seeking more than $25,000 in special perks — like 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 the bailout of Wall Street.
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 resigned, agreed to forgo 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.
Copyright 2009 The New York Times Company
