Executive Compensation Overhaul Eyed By Obama Administration

Wall Street Journal:

WASHINGTON -- The Obama administration has begun serious talks about how it can change compensation practices across the financial-services industry, including at companies that did not receive federal bailout money, according to people familiar with the matter.

Read the whole story: Wall Street Journal

Comments

[Hermann Stern]

The Obama administration's attempts to change executive compensation practices across the financial services industry should not be about aligning pay with long-term performance but be about aligning pay with true performance - and not the economy's performance.

To be truly fair, performance evaluations must separate the impact of management from the impact of a booming economy. Comparing a company's performance against the average of its peers who are all subject to the same external factors - what we call indexing - uncovers true operating performance. Indexed bonus plans reward the true performers only, thus preventing spiraling pay while still encouraging outperformance.

The current financial crisis begs for the fairness and simplicity of indexed bonus plans more than the bonus caps, maluses or shareholder votes currently on legislator's tables.

[BlueBoomer]

The credit card companies have us over a barrel with our pants down around our knees...if legislation is passed to disallow arbitrary increases in interest rates, then the CC companies can claim that their income is being harmed such that they must reduce lines of credit, etc...a not entirely indefensible argument, EXCEPT for the fact of excessive executive/upper management compensation and the notion that they feel we should somehow be expected to subsidize their 5th home, jet, etc.

SO... perhaps the gov't could start with the premise that any (financial)/lending institution whose CEO, CFO, etc.'s compensation exceeds that of their company's average salaried worker by more than 10x (or other appropriate ratio), that corporation AND the "offending" executive(s) must pay an "excessive compensation tax penalty...

There's definitely precedent for such a measure...like when I, at age 45, used MY OWN retirement money to start my business, I WAS PENALIZED a hefty 10% over and above the normal income taxes I had to pay on that (MY OWN) money...a fate that essentially anyone who finds themselves younger than 591/2 with talent, experience, a retirement fund, BUT NO JOB -- (or a miserable existence working for a cocky twenty-something )-- will experience if they try to use THEIR OWN MONEY to start a business.

SO...IF the gov't WANTS to "dis-incent" these exorbitant executive/­management compensation packages, THEY CAN...AND SHOULD!

[Youdontgetit]

Are you kidding? They have you over a barrel? Here is an idea....don't use their card. Pay cash or write a check. My god you are pitiful.

"a not entirely indefensible argument, EXCEPT for the fact of excessive executive/upper management compensation and the notion that they feel we should somehow be expected to subsidize their 5th home, jet, etc."

Actually you are. If the company is doing well then they make more money. If you don't like it don't use their product!!! You are so scary. You don't like the fact that someone is making lots of money so you want the government to take it. Here is an idea...free market! Get all the whiners like yourself together, boycott the company and see what happens. If it works and you cause them to change then good for you. Honestly. If not, shut up and worry about your own income.

Oh, and you were penalized for using retirement because it probably went into savings without being taxed.

Please, take responsibility for your own life and quite trying to run others.

[Bude]

Watch Eliot Spitzer on Rachel Maddow if you're looking for a score card.

We're screwed!

[aramos]

Here comes Big Brother..again!


Don't worry about the choices people make in their own lives, but make sure to get those bad Wall Street guys. We become more socialist everyday.

[paixa3]

Are you truly that ignorant? If you do not know by now that when the white house speaks anymore, it is merely BLAH BLAH BLAH, just as the bush white house.

[motodude]

What? Another limp slap on the wrist. So far the Obama administration has just given these crooks trillions of dollars and enforced NOTHING! It looks like all Obama's Wall ST insiders are still working for Wall St. certainly not for Main St. WHERE IS THE CHANGE OBAMA? I thought you said reform not more giveaway at our expense.

[PhilipTaylor]

IS ALL PUBLIC HOPE LOST TO THE FINANCIAL LORDS?

Economic Sovereignt­y=American gov makes decisions independently of other governments!
Crisis of American Economic Sovereignty=Exist?
American economy can improve=while outlook for American Economic Sovereignty Declines
FED wants America economic growth BUT willing to give up Economic Sovereignty
Patriots=Want core American Ideas+Cons­titutional Heritage+will sacrifice Economic Growth
Investment Bankers want =International Political Regime to Smooth out Markets Behaviors
Agreement=­Washington­+Wall Street=financial reforms to prevent another crisis like 2008-2009
Clinton+Bush=Errors to insure incalculable money made by Elites during era of global free trade
Obama=in spite of being impressively intellectu­al+honorab­le=Forced to use new regulations
Populist Reformers=find New Regulations effects less appealing than expected due to CRISIS
Reforms=will prevent Public from ever having a chance to Throw off Their Financial Lords
Bad Bank=Garbage dump of every kind of Bank Debt that is then destroyed
Voting populace=Can throw off their government and its “Bad Bank”

Alternativ­e=Obama+Co­ngress Stand up for Middle-Class Main Street Americans=THE 99%
__________­__________­__________­_________

Today we LEARN:

Wall Street gets their $12,800,000,000,000 right away! (Bloomberg News) + $1 Trillion on the way!

Main Street gets $45,000,000 in two months!

Main Street gets 0.00035156% of what Wall Street gets!

For every $1 Main Street Gets from Obama+Congress, Wall Street gets $284,444.

Who does this Obama Administration and our Congress Really Care About?

[paixa3]

Not you, nor your friends?

[Youdontgetit]

Gets...I love that..."Main Street" should get more? And so should Wall Street? I guess people who don't pay taxes always forget where this government largesse comes from. It is money people earned and then had taken away. Everyone should get less and a lot less. Go make money. Quite leaching off of society. If everyone would actually do somethig and quite whining we wouldnt need the tax money or the bail out money. If everyone paid credit cards every month they wouldn't have to pay those "mean" fees. Buy a house you can afford and make payments on it and they wont foreclose and then all of the financial trading instruments wouldn't fail and become worthless.

[LeonBNJ]

The easiest policy would be to change the tax laws to discourage exceessive compensation, especially incentives, certain benefits, pay/bonuses not based on real improvements in revenues and profits as well as increasing quality employment in the USA. Also increase taxes on short term capital gains on stock and property but cut it to produce or keep jobs in the USA.

[rabiddog6708]

How about regulating the practices that actually led to the meltdown? Executive compensation should be determined by companies themselves, unless they receive TARP, if so, then the government can have its say in that area. Focus on the shennagians (most legal, unfortunately) that caused the collapse.

[kyeblue]

I won't be surprised that the historians 500 years later will call Obama but not GW Bush as the president who destroys the American empire.

[Kassandra]

Oh, I have no doubt. Hell, they're busy rewriting history as we speak. But actually, the ones who really DID do will never get a mention; Greenspan and Bernanke

[paixa3]

BINGO....plus Summers and Geithner.

[BPCentrisAmerican]

The American empire is just to expensive to maintain and will collapse under it's own weight just like every other empire in history.

[glockman]

Why do we have to be an empire?

That's part of our problem to begin with.

[RobertHenryEller]

Possibly desirable, probably unworkable.

The biggest drawback is that, even if you could devise a very strong, even effective, solution (I.e., Glass'Steagall), you almost beg industry lobbyists to spend an inordinate amount of time and money "buying fixes" from elected officials. As history demonstrates.

The best, least intrusive solution, of course, is simply to insist that banks are never too big to fail, and refuse to ever bail them out.

Another solution, repeal federal deposit insurance.

When banks can fail, and employees, depositors, stockholders, creditors and customers all know this, people will be a lot more careful about where they put their money, where they work, and how much employers pay for services.

The bankruptcy process is more or less quite an effective mechanism.

The best financial "innovation" will come when failure is not rewarded.

[Kassandra]

So, you're in favor of taking away everything that got US out of the last Depression????

[RightWingMarine]

why not quit pretending and just have the govt take over the banking industry? After all is there any govt service that the people aren't pleased with?

[Kassandra]

The war machine. We can't have reasonable health care but we sure get wars, don't we? That's what's killing this economy and will kill what's left of it.

[MANK]

Went to a weddding where the Wall St. groom was handing out $100 bills to anybody with a white serving jacket just for a smile.
There is NO solution for the mess we are in.

[GroundhogBoy]

That's called tipping the staff for your wedding.

BTW, what do you think it cost him to pay for your entertainment and meals that day?

[Kassandra]

Stop "eyeing" things and JUST DO IT!

[kyeblue]

I don't think that a president has constitutional right to do it.

[Kassandra]

That never stopped Bush and all his "executive powers" are still there.

[ResistanceisFutile]

To little, to detailed and to late.

Next thing Obama will be doing is telling my wife she earns to much as a nurse.

In order to fix the healthcare problem, and on the advice of Obama's new best buddies, he will be cutting her hourly wage.

Of course driving down healthcare workers wages, except for physicians, won't benefit the hospitals, insurers or the pharmaceuticals. They would like you to believe they have the best interests of their employees in mind.

Demand a single payer healthcare system.

Take the advice of someone who has been in healthcare for thirty years, in research, clinical, financial and management. My wages were livable but the real money was in investing in healthcare stocks, insurance, pharm, equipment manufacturers. The return was twenty to thirty percent per year for decades.

Off topic but important.

[truegreen]

We've heard this story before. I''ll believe it when i see it.