45 responses so far ↓

• 1 Meg from FruWiki // Feb 7, 2009 at 9:20 am

  I have got to disagree with the other Meg on this one. What about the single moms working 70+ hour weeks in dead-end jobs just to get food on the table? Don’t tell me that people making millions of dollars “deserve” that money any more than they do! We don’t live in a meritocracy; people don’t get what they deserve. And capping those people’s pay wouldn’t even scratch the surface of what some of them truly deserve for helping us get into this mess.

• 2 D // Feb 7, 2009 at 9:50 am

  Someone on the news was discussing this..and they made a good point saying that sometimes companies need a “nudge” in the right direction

  In a 1981 (or 1983, I could be wrong on the year) survey done by Forbes Buisness Magazine. The average ceo made 41 times what their avg worker made

  In 2007 the average ceo made 433 times what their average worker made.

  This is the problem. The gap is too broad and they need to reign in these exorborant salaries. That is big reason these companies are failing to begin with.

• 3 D // Feb 7, 2009 at 9:51 am

  My blog link was wrong—this is mine

• 4 tom // Feb 7, 2009 at 10:01 am

  I do agree with the salary cap. Many of these Execs actually didn’t get us into this mess, because those Execs have long since been fired. So, it should not be a part of the argument. What should be the main point of the argument is what LAL said… they are now civil servants. I know there is still an issue of the rest of the company, they do not have a salary cap, but I guarantee that the salary structure will be completely modified within those massive institutions.

• 5 Kristy // Feb 7, 2009 at 11:21 am

  I disagree with the salary cap. Because the old CEO’s have or will be fired, who are these banks going to hire? Why would a new CEO take a lower salary to work for a failed bank? I think that the new hires won’t be experienced enough to run these companies.

• 6 Meg from FruWiki // Feb 7, 2009 at 11:27 am

  Not sure I agree with you 100%, but that’s the best reason I’ve heard so far, Kristy!

• 7 LivingAlmostLarge // Feb 7, 2009 at 5:53 pm

  I’m away for the weekend, but I have a few minutes of internet. Kristy. Richard S Fulk was CEO of Lehman Brothers from 1994 to 2008. How is he not responsible?

  http://en.wikipedia.org/wiki/Richard_S._Fuld,_Jr.

  Second, Robert Nardelli was CEO of Home Depot 2000 to 2007 then fired for mismanagement. But then hired by Chrysler.

  He was paid millions from HD to be fired.

  I’m sorry but how can you say that the CEOs in charge aren’t responsible?

• 8 Kristy // Feb 7, 2009 at 6:01 pm

  I never said that the CEO’s were not responsible. What I am questioning is that once these CEO’s are fired, who are the companies going to hire and only pay $500K a year? Is the government going to keep the old CEO’s?? I doubt it. Which CEO’s who are experienced in running companies are going to take a paycut to run a bank that is now owned by the government? I am concerned that the banks are not going to be able to hire people that have the experience and knowledge to bring them back to life.

  I know that if I were a successful CEO making millions somewhere that I would not want to take a paycut to $500K a year….would you?

• 9 Barb1954 // Feb 7, 2009 at 7:58 pm

  Kristy wrote, “. . . who are the companies going to hire and only pay $500K a year?”

  This statement shows clearly how screwed up the thinking has gotten in this country. ONLY $500k a year — are you kidding me???

• 10 Kristy // Feb 7, 2009 at 8:08 pm

  Barb, when you are a CEO used to making multi-millions of dollars a year, then yes they will only be making $500K a year. If a CEO is used to making $10 million a year, $500K is only 5% of that salary. Would you want to take a job that pays only 5% of your previous salary?

• 11 Debt Challenger // Feb 8, 2009 at 11:22 am

  Living,

  I agree with you. This isn’t socialism. There have been CEO’s that have taken a salary of $1 just to show what they can do with a company. As far as who will come and work for $5o0K. Someone with something to prove. If they can turn that company around financially they can reap the benefits later. Is there a cap on stock options? They can and will find other ways to make money. This will just weed out those who actually need the money versus those who are just taking the money because, it is there.

• 12 Meg // Feb 8, 2009 at 1:49 pm

  Of course I don’t think those executives deserve to be paid what they made in the past, nor do I think school teachers deserve $40K a year or athletes deserve $50M a year.

  But I don’t want Obama or any other governmental official dictating salary caps – to ANYBODY. There will always be high earners who don’t deserve s*it and low earners who deserve everything. That’s the price we pay for FREEDOM. If you truly want it any other way then perhaps socialism isn’t the right word – perhaps it’s communism.

• 13 Meg from FruWiki // Feb 8, 2009 at 2:22 pm

  Wow, way to throw around the C word, Meg! Maybe you need a refresher course on communism and socialism because I don’t see any of us here suggesting that.

  I believe in the salary caps IF they’re taking public money as a bailout. Nobody is talking about the government taking over companies, voluntarily or involuntarily. That’s a big difference from advocating socialism or communism. Those companies are free to do what they want — so long as they don’t come begging for our tax money. That’s the cost of freedom — just like churches can endorse whatever politicians they want, SO LONG AS they don’t apply for certain special tax privileges. There are trade-offs. And people are free to make those trade-offs.

  And yes, there will always be people who earn less or more than they probably deserve. As I said, we don’t live in a meritocracy — so let’s stop pretending that we are and saying that Mr. CEO is entitled to his salary because he “deserves” it. But let’s also consider upping the salaries of our teachers because that is ultimately within our power as taxpayers.

• 14 James Raider // Feb 8, 2009 at 2:59 pm

  There is a very dangerous trend beginning to show here.

  Why is there so little outrage against the Obama intrusion on the corporate fabric?

  http://pacificgatepost.blogspot.com/2009/02/obamas-salary-cap-red-herring.html

  What will this lead to?

• 15 Kristy @ Master Your Card // Feb 8, 2009 at 4:23 pm

  I agree with the cap and think it’s about time. One of the reasons these companies are floundering is that, in addition to meeting their other outputs of money, they’re having to pay these ridiculous sums of money to cover CEO salaries. If it’s a private company with the assets and options to do so, then fine. But not on my dime! I don’t want to have to pay their salaries through my tax dollars when they’re begging the government for help.

  Now, in response to Kristy’s suggestion, the economy doesn’t have a lot of leg room to maneuver, so the reality is that if someone is looking for a job, they’ll take what they can get. I think we’d all agree that $500k is better than minimum wage, $12/ hour, or even $25/ hour. In this sort of an economy where the demand for jobs is higher than the supply, I’m willing to bet there won’t be much of a problem finding capable employees to run the company. And, in regards to your question “Would you only want to make 5% of your previous salary?” No, but I make $32,000 a year. I think the bloated salaries of some of these execs should be cut, regardless of whether or not they are requesting aid. While I believe it is important for a company to invest in its people, doing so at the cost of other areas is dangerous. These companies should be taking those funds from the CEOs salary and funneling it into ventures to expand the business, build better technology, community involvement, etc. There is no conceivable reason that CEOs SHOULD be paid that much when most of them work less than 40 hours per week, spend most of their time on the golf course, and make terrible decisions than end up running the company to the ground.

  I’m sorry, but I say CEO salaries should be capped just like everyone else’s in the company is already capped. If they rebuild the company to something prosperous, then re-open negotiations for a higher wage, but $10 million to run a failing business is an embarrassment to this country!

• 16 fengshui // Feb 8, 2009 at 11:59 pm

  “I disagree with the salary cap. ”

  You WANT your tax dollars to be paying someone $5 million for doing WHAT exactly? No thanks!

• 17 fengshui // Feb 9, 2009 at 12:03 am

  “Barb, when you are a CEO used to making multi-millions of dollars a year, then yes they will only be making $500K a year. If a CEO is used to making $10 million a year, $500K is only 5% of that salary. Would you want to take a job that pays only 5% of your previous salary?”

  Perhaps this IS a good thing! We can weed out all of the lazy, arrogant, pompous, “old” ceo’s that were so greedy that they allowed companies to take too much risk and then failed miserably…. get some “new” young ceo’s (who would LOVE to make $500k) in there are lets accomplish something…..

• 18 fengshui // Feb 9, 2009 at 12:09 am

  “But I don’t want Obama or any other governmental official dictating salary caps – to ANYBODY. There will always be high earners who don’t deserve s*it and low earners who deserve everything. That’s the price we pay for FREEDOM. If you truly want it any other way then perhaps socialism isn’t the right word – perhaps it’s communism.”

  Incororating some BASIC ethical principles when dealing with the use of TAXPAYER dollars is NOT implementation of communism. Is it too much to ask that SOMEONE finally instill a sense of social responsibility????? Thank you Obama. Seriously. Sometimes it is depressing to read the news lately….

• 19 fengshui // Feb 9, 2009 at 12:09 am

  *sorry for the typos* no time to spellcheck tonight

• 20 Kristy // Feb 9, 2009 at 6:09 am

  The reason these companies are failing is not because of the high salaries of CEO’s but because of business decisions made during the economic boom. I agree that CEO’s are paid too much many, however I don’t agree with the government capping the salaries of CEO’s. I don’t think the companies will be able to turn themselves around and our tax dollars will now go down the drain.

  Feng -

  “You WANT your tax dollars to be paying someone $5 million for doing WHAT exactly? No thanks!”

  I want the CEO paid a fair salary to fix a failing company, not peanuts. These people do not work the same hours as you and I, they actually work HARD. They are always on call and now you want to pay them what, nothing? Sorry but I would rather my tax dollars pay someone who is competent and will turn the company around, rather than not pay them and then the companies fail. But then again, I am against the bailout, I mean stimulus package anyway. I would rather the government let these companies fail, let the houses get foreclosed on, etc. The government needs to let this play out, houses have been overpriced for quite some time now. They are prolonging the inevitable and this recessions/depression will last longer because of it.

• 21 Kristy // Feb 9, 2009 at 6:11 am

  Feng- you talk about social responsibility. You are okay with your tax payer money bailing out foreclosures to people who bought too much house and couldn’t afford it? I for one am not. If you are all for social responsibility then you would not want your money going towards that either.

  All Obama wants to do is enable the poor to keep being poor by giving them government money, my tax dollars. No thanks!

• 22 Jessica // Feb 9, 2009 at 10:43 am

  @Kristy,

  The Home Depot/Chrysler CEO is a perfect example of why $500,000 dollars is a good idea. What does a guy who can’t manage tools know about cars, and why does he even deserve another job. If a Home Depot employee was a royal mess at selling tools, he certainly isn’t going to have an easy time getting a job on the production line at Chrysler. On the other hand, I’m sure there are plenty idealistic and smart people who were working at Chrysler at the time, who could have done an awesome job of not ruining the company, and happily do it for the $500, 000 a sum you seem to think is paltry. Rich and poor, everyone needs consequences for wrong doings.

• 23 fengshui // Feb 9, 2009 at 12:06 pm

  “You are okay with your tax payer money bailing out foreclosures to people who bought too much house and couldn’t afford it? I for one am not. If you are all for social responsibility then you would not want your money going towards that either.”

  I do not support the mortgage bailout either. I’m not being rewarded by making my payments on time! It is bullsh*t, in my opinion….

• 24 fengshui // Feb 9, 2009 at 12:18 pm

  Since when is $5 million a FAIR SALARY???? Seriously people! This is the type of thought process that has landed us in this mess. This is all a result of GREED. Plain and simple. I want more, I need more money, I want a bigger house, I need a bigger salary, a $2 million dollar bonus isn’t big enough- I need a $10 million bonus, greed greed greed. And not just from the money grubbing high executives, but from consumers in this country. We all (most of us) got in over our heads because of greed. Plain and simple. I don’t care if you’re on call 24/7. So are many doctors, nurses, EMTs, firefighters, etc! People who are called into surgery at 3 am to operate on your brain, and they aren’t paid $5 million a year!

  I am certainly not ok with paying some “alleged” prodigy $ 5 million a year to decorate his office with a $125k rug and a $75 antique commode, while he figures out how to “save a company” and then walks away with a $110 million severence package when the company goes bankrupt. The government is trying to protect taxpayer dollars from greedy and irresponsible companies. You basically have to treat people like they are in 1st grade. Ok class, you cannot spend tax dollars at the dayspa, or the strip club, or you cannot decorate your office with this money, or fly your family to Fiji for the weekend, or purchase custom Armani suits for work. Seriously… You have to spell out and map out and actually explain to people that they cannot commit fraud with bailout money. How very very sad.

• 25 Kristy // Feb 9, 2009 at 12:33 pm

  Actually I am not one of those people who got in over my head nor am I greedy. I just don’t think its right to put a salary cap on a CEO of a company. *Shrug*

• 26 tom // Feb 9, 2009 at 4:00 pm

  Every one of you is forgetting one thing…

  These CEOs will still be able to collect Restricted Stock Options!!!!

  IF, a big IF, they can turn around the company, pay off the Gov’t debt, and increase share price, these guys will be basking in hundreds of millions of dollars in stock options!

  It’s just as someone else said, why would they take a salary of $1? Salary is nothing to these guys, it’s the challenge and the stock options!

  What people are not addressing is the fact that these companies have a choice NOT to take the money. If you do, there are stipulations. It’s neither socialism or communism!

  Should the Gov’t dictate what people make? Hell no, but if your company is taking billions upon billions, then that’s the price you pay.

• 27 fengshui // Feb 9, 2009 at 6:40 pm

  “Actually I am not one of those people who got in over my head nor am I greedy. I just don’t think its right to put a salary cap on a CEO of a company”

  When that company is paying their own CEO with its OWN $$$, that company can pay them what ever they see fit. However, when you’re spending MY $$$, and is $ that I could be using to pay for food, to pay down my student loans, and lots of other things….. So, that is the issue that I have.

• 28 SimplyForties // Feb 9, 2009 at 7:12 pm

  I am for the salary cap. The companies that choose to take the bailout money should have restrictions on how that money can be spent. Top-level salaries are one of those restrictions. Salaries are a small part of the compensation package of top-level executives. If they don’t take the money, they can run their companies as they see fit. It’s their choice.

• 29 LAL // Feb 10, 2009 at 10:47 pm

  Gosh lots of answers and I haven’t had time to respond!

  Meg that’s my point. I don’t think the CEO necessarily works harder than many other people.

  D, I agree that CEOs used to be paid 41x the worker, now it’s 433x? And they wonder why the middle class is disappearing?

  Tom, doesn’t shareholders decide what CEOs get? Well consider Uncle Sam a massive shareholder in these companies. And he says you get $500k.

  Kristy, where are these CEOs making $500k going to go? Which company will hire them? Aren’t we in financial trouble? And $500k is still a lot of money. Maybe they should be grateful they still have a job?

  Barb1954, I agree that it is screwed up when we think $500k isn’t enough.

• 30 LAL // Feb 10, 2009 at 10:52 pm

  Debtchallenger, I consider it being that the Government now owns a large chunk of the company. Why shouldn’t they dictate salary terms? How is it different from a major stockholder dictating?

  Meg communism is a political state and socialism an economic one. Socialism is liberal, communism is conservative. Socialism everyone is equal and has a say. Communism only a few have a say, which is what happened under Bush.

  Also Meg no one is holding a gun to the head of these companies and saying “You must take the money”. They are coming hat in hand! Thus they are asking for a handout. Why shouldn’t it come with conditions?

  I agree with Kristy @ MYC, that perhaps the cuts in the CEO’s salaries would pay what? 433 less layoffs. Hmm..that would be interesting if we cut CEO’s salaries and kept 433 people more employed.

  James Raider, for the same reason why little outrage against Bush for invading on our privacy!

• 31 LAL // Feb 10, 2009 at 11:02 pm

  Fengshui brings up a good point. Why not allow a young hotshot anxious to make a name and $500k a chance to run companies? I liken it to teams using homegrown talent over buying an expensive free agent. When do you give the youngsters (cheap) a chance?

  I don’t think Obama is imposing ethical limitations, but natural ones. When we at the bottom are suffering and struggling, why does the top get a free ride?

  Kristy, how do you know someone less paid is less capable and competent? I recall that Steve Jobs and Bill Gates had to start somewhere. That many CEOs started out at the bottom, and how do we know that someone isn’t younger and hungrier? With newer ideas on streamlining the companies?

  And we’re talking about people taking bailout money. You can’t compare no bailout to bailout.

  No, Obama wants to expand social programs to catch as more of us fall into “Poor”. Sadly John McCain said it best last month on frontline. “We are in for a perfect storm on healthcare, with rising unemployment, more people without health insurance, and rising medical costs, something will have to happen.”

  Jessica, thank you! I agree what does the Home Depot CEO know about Cars? Or the Border’s CEO George L Jones was hired because he was a CEO Saks and how are they doing?

  I think the mortgages should be fixed rates to keep people in their homes. That way we can stop the downward spiral.

  And I think $5 million is a large salary. I can’t help but wonder if a young hotshot couldn’t be motivated to take on the challenge for less?

• 32 LAL // Feb 10, 2009 at 11:05 pm

  Tom, I know about the restricted stock grant. My DH is about to get some. But anyway though, it only is millions if the company does well! So it’s incentivizing these guys to do well. They should turn the companies around.

  Again think of the government as a major stockholder who thinks that CEOs need a lower salary. Would everyone be pissed if Warren Buffet and Bill Gates got together and put billions into these banks and said to the banks “CEOs get $400k, same as the president?” Or would all the people against the cap be happy and say “it’s capitalism, thus Warren and Bill can say whatever they want?” Well then Uncle Sam should be allowed the same freedom, so what if it’s the government?

• 33 tom // Feb 11, 2009 at 11:55 am

  http://money.cnn.com/news/specials/storysupplement/ceopay/

  CEOs actually don’t get paid much more than the salary cap. Bottom line is that this $500,000 salary cap means nothing. The bonuses are the main incentive the CEOs really care about. They won’t jump ship as the critics say.

• 34 Kristy // Feb 12, 2009 at 5:42 am

  LAL – Steve Jobs and Bill Gates are rare. I don’t know for sure that people will be less competent if they are paid less, but it makes sense. That’s like asking me to do my job for minimum wage. I wouldn’t do it.

  I disagree with the entire bailout, not only this one but the last one as well. I feel that they should let the banks fail and let the foreclosures happen. We will get out of this mess sooner if the government stays out. Otherwise we are looking at being in a recession/depression until 2011 or 2012.

• 35 SimplyForties // Feb 12, 2009 at 10:10 am

  Kristy – I do the best I can at whatever job I have, regardless of my compensation. Luckily, I’m now paid quite well for my work but I worked just as hard at minimum wage as I do now. It’s a work ethic and is not related to my rate of pay. I don’t believe I’m unique in that regard, or at least I hope not!

• 36 LAL // Feb 12, 2009 at 10:32 am

  Um Kristy, there are many people working very long hours (thinking nurses, doctors, teachers, etc), who get paid not as well as they should and yet I think they work hard.

  Right now where I work, the basic salary is $36k and yet most people are working 60+ hours a week. That is $11/hr in a HCOLA. I make less than that and work more than 40 hours. I think I put in my best effort. Tomorrow to finish my work I’ll be in again at 3 am due to the situation.

  I know my mom as a social worker, worked MANY hours underpaid and overworked and underappreciated. The stress was immense, but she did and still does like helping people.

  Think of the many teachers and they take papers home to grade, make study plans, all outside their “teaching” hours.

  I would not say being paid less makes someone less competant.

• 37 Kristy // Feb 12, 2009 at 11:19 am

  I think you both misinterpretted what I said/meant. Maybe I was not clear. I work hard at whatever I do as well and did even when I was a teenager making minimum wage. However, the job I have now pays significantly more and yes I work hard for it. Would I take the same job as I have now and only get paid minimum wage? No, I wouldn’t. I would think this of most people, including nurses, teachers, etc. Once you start making more money, means that you would like to be compensated fairly for the position. The same goes for CEO’s.

  Second of all, I do think that most doctors and nurses get compensated fairly, same for teachers. Would they like to work for minimum wage while performing the same task? I doubt it. That is what you are asking the CEO’s to do.

• 38 LAL // Feb 12, 2009 at 3:02 pm

  I don’t think Kristy $500k is minimum wage. Nor can it even be qualified as such. And have you seen what doctors and nurses make compared to what they do?

  Or teachers and social workers? It’s a rough job. I don’t think they are fairly compensated. They might be earning minimum wage when you factor in all the extra hours they do.

  Any one of these people would leap at $500k. Most people would leap at $500k. Even upper management.

• 39 Kristy // Feb 12, 2009 at 7:03 pm

  I am not saying that $500K is minimum wage. I am saying that if you had a rather large salary and it got cut to $500K then it would be like one of us working and then our pay being cut to minimum wage. It’s a hypothetical. You wouldn’t like it either.

• 40 fengshui // Feb 12, 2009 at 10:30 pm

  As an RN with an advanced degree, I would say that making $75k a year isn’t all that great…. There are so many people out there making twice or more what I do with less than half of the education. I know, I know, I chose my profession…..

• 41 LivingAlmostLarge // Feb 18, 2009 at 5:23 pm

  I don’t think I would care that much if I made minimum wage. I think I make less now after taxes. Actually it might be close to zero.

  fengshui I agree that people do not make what they work for necessarily.

• 42 James Raider // Feb 18, 2009 at 6:52 pm

  Are you responsible for your neighbor’s bad decisions?

  http://pacificgatepost.blogspot.com/2009/02/obama-mitigating-mortgage-foreclosures.html

  Obama and Congress appear to think so. Is there any common sense in this program?

• 43 LivingAlmostLarge // Feb 18, 2009 at 8:27 pm

  Yes, what else can we do? We already are responsible with all the BK and foreclosures.

• Carnival of Personal Finance #193: YouTube Edition — Broke Grad Student - Feb 23, 2009

• Do I get paid too much? - Mar 4, 2009

Leave a Comment