Federal Government Overrides Executive Compensation Packages
CNBC reprints a NYT article:
Responding to the growing furor over the paychecks of executives at companies that received billions of dollars in the government’s financial rescue, 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 annual salaries of their 25 best-paid executives by an average of about 90 percent from last year. Their total compensation — including bonuses and retirement contributions — will drop, on average, by about 50 percent. The companies are Citigroup…, Bank of America…, American International Group…, General Motors, Chrysler and the financing arms of the two automakers.
I don’t have the time to look into this more carefully, but I’m really hoping that the “pay czar” is only overriding compensation packages at companies that still have tax money (as opposed to ones that paid it back).
Regardless of the legal niceties, this is a very bad development. Now the unruly masses get a taste of seeing the noble DC crusaders pushing back against the corporate fat cats. Hip hip hooray! People not profits!
Oh one question: Where does the clawed back money go? I’m assuming it goes to the corporate shareholders, and not (say) a fund for baby formula for the homeless.
