The Obama administration indicated today that it will slash the salaries of executives of companies who received bailout money by up to 90%. Kenneth R. Feinberg is the Treasury Department official in charge of executive compensation and will implement the plan that will see the salaries of 25 execs cut at companies that include Citigroup, Bank of America, AIG, General Motors and Chrysler. At AIG in particular, no executive will be able to make more than $200,000 a year.
The government-directed pay cuts illustrate the still troublesome intertwining of private enterprise and public funds. Like many in the country, I have issues with excessive corporate salaries and golden parachutes for the CEOs of failing corporations. It’s a problem that needs to be addressed by shareholders, and it leaves me more than a little uncomfortable when the government begins setting salary caps for supposedly private companies.
It’s true that since these companies were “saved” with taxpayer money the government has a duty to make sure the money is spent responsibly. Still, such a draconian cut makes me a tad nervous. $200K seems like a very small amount for executives in New York City, where the cost of living is much higher. There are owners of businesses here in Dayton, OH that make more than that. Again, I’m no apologist for CEOs who by and large have made extremely poor decisions – but shifting decisions that ought to be made by rightfully indignant shareholders and boards of directors to federal bureaucrats isn’t necessarily a great move in itself either.
This is one of the problems with all the bailout mania that happened this past winter and spring. We are left with a number of large corporations that with a level of direct governmental control can no longer be classed as the private sector. Is there a timetable for returning these companies back to investor control instead of federal control using taxpayer money? If there is, I haven’t yet heard it.