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Brother, Can You Spare 5 Million Dimes?

Brother, Can You Spare 5 Million Dimes?

by Frank Roche on February 5, 2009

in Executive Compensation

dime[Photo credit: Jeff McCrory]

Could you get by on a $500,000 annual salary? For many, that’s a laugh. For others who work in the the C-Suite, it’s a laugh, alright. Or maybe a cry.

President Obama was all over the news yesterday talking about executive compensation for companies that receive TARP funds. Get a bailout; limit exec comp. It’s that simple. If the government bails out a company, named executives will have their salaries capped at $500,000. If they get equity, it has to be restricted stock, and must include a provision that the TARP loans be paid in full before the restrictions are lifted.

I’m sure many of my friends in exec comp are blowing a blood vessel today. They’re seeking shelter in Adam Smith grottoes and lighting candles to the free market. They’re right — for companies that are participating in the free market. We’ve done everything but nationalize banks in this country, and that sure as hell isn’t a free market.

People will gripe about how you won’t get the best talent at $500K. I say, $50 million pay packages were supposed to get the best talent at some of those financial services companies. How’d that work out? Maybe I’d be happy to have TARP-funded companies run by execs who think $500,000 is plenty of pay. We could do worse. We already have.

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