Stop The Madness!
Everyday earners, underpaid staff, and retrenched professionals… it’s time to express your views on excessive executive pay! After the banks have repaid their TARP balances, we will all be treated to a slow (but guaranteed) series of sky-rocketing bonuses on financial executives. Goldman Sachs has already done its part by announcing plans to pay $770,000 in bonuses. The Times Online received a comment from David Viniar, Goldman Sachs’s chief financial officer, “… We know it. We see it. We don’t like it. We believe we are doing good things. We have a pay-for-performance culture. As you saw in 08, if we don’t perform well, compensation goes down, and if we do, we reward people appropriately.”
The American public has overwhelmingly condemned the size and timing of these bonuses. In response, Obama appointed pay czar Kenneth Feinberg to use the government’s regulatory powers over these executives.
Jeffrey Goldfarb of breakingviews.com opines, “… If banks have repaid their taxpayer debts, rebuilt their balance sheets and restructured their pay schemes to the satisfaction of watchdogs, the pitchfork-wielders will find it harder to make their case this time round.”
Investors will have a more legitimate beef. They have accepted the idea for too long that it’s OK for banks to pay out such a high percentage of revenue to employees. It may be too late for regulators to exercise further moral suasion to curb the excesses of banker pay. But shareholders may still have some sway if they act soon.”
In my opinion, aside from shareholder influence, independent board of directors should make the decisions this time. There’s no place for fear that they might lose top level executives because of the reduction in their payouts that will be proposed. Human resource piracy is often the blackmail tactic that these folks are shamelessly prodding to anyone who gets in their bonus pays. It’s time to put a cap on their salaries until such time that the economy convalesces.
If this isn’t convincing for you, Prof. William White of Loyola Marymount University has this to say, “… The average U.S. executive earns roughly 300 times more than the average worker. In the rest of the world, the ratio of executive pay to worker pay is far narrower—from about 11 times worker pay in Japan to 50 times worker pay in Venezuela.”