Taxpayers have stake in executive salaries
Wall Street this week is all atwitter about the pending mandate from the Treasury Department: Top executives at the largest financial and auto firms that received government bailouts may see their salaries and compensation packages slashed.
My god, what can they be thinking? some have gasped. Limits on pay, bonuses and perks will drive top talent away from these companies. The British head of Goldman Sachs even said this week that financial firms have no reason to be embarrassed by high bonuses, but firms might look for more friendly locations if governments try to restrict pay.
Well, we wouldn’t want that. But it’s hard to imagine a more friendly environment than a nation that shells out hundreds of billions of taxpayer dollars to keep major financial institutions and auto companies afloat — in many cases, bailing them out from their own risky investment schemes.
This newspaper has never been an advocate for government interference into the operations of private companies, including how they compensate top executives. In most cases, that is between the executives and the board of directors or shareholders.
But things are a bit different with the seven companies subject to the Treasury Department pay rules. They have received massive amounts of public money, and they are no longer entirely private operations.
When millions of taxpayers are struggling in the current economy — many having lost jobs or suffered pay cuts of their own — it is unconscionable that some folks on Wall Street want to party like it’s 1999.
In large part because of the bailouts, the companies in question are recovering from their near-fatal economic conditions of a year ago. Some of them have recorded profitable quarters recently and have been whooping up that success with large bonuses to top employees, along with revived perks such as company limos and aircraft.
That doesn’t sit well with people battling to keep aged vehicles on the road and hoping they’ll scrape together enough money to pay the mortgage or buy food. Or with small business owners fighting to keep their doors open and employees on the payroll.
We can’t fault the Obama administration and Treasury Department pay czar Kenneth Feinberg for telling these companies that excessive pay for executives is not acceptable under these circumstances. The wonder is that leaders of these firms couldn’t figure it out by themselves.