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SUNDAY, NOVEMBER 22, 2009
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Pay Czar Slashes Top Salaries at 7 Bailed-Out Firms

175 top earners will see pay cuts averaging 50%

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(Newser) – President Obama’s pay czar will cut compensation for the 25 highest-paid employees at seven companies that took large amounts of government aid. The 175 executives will face salary reductions of 90%, but with other compensation elements added in, the total reductions average 50%. Ken Feinberg also will require the seven bailed-out firms to change the way they do business in an effort to discourage excessive short-term risk-taking.

The financial-products division at AIG will suffer some of the toughest restrictions, the Wall Street Journal reports—no employee of the unit will make more than $200,000. In addition to AIG, the other firms affected are Bank of America, Citigroup, GM, GMAC, Chrysler, and Chrysler Financial.

FILE - In this Sept. 16, 2008 file photo, The American International Group logo is shown in New York.
FILE - In this Sept. 16, 2008 file photo, The American International Group logo is shown in New York.   (AP Photo/Mark Lennihan, File)
This Aug. 15, 2007, file photo shows Kenneth R. Feinberg at his office in Washington.
This Aug. 15, 2007, file photo shows Kenneth R. Feinberg at his office in Washington.   (AP Photo/Charles Dharapak, File)
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43 comments
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DarkFrancis
Oct 21, 09 3:58 PM CDT
Sounds fair enough to me. They caused the problems, they put their hands out, they should take a cut and say 'thank you may I have another?' Reply
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+13
IN RESPONSE:
reasonator
Oct 21, 09 6:18 PM CDT
You're asking the wrong questions. The question should not be, "should a company have a pay cap," or "should top execs make so much money." The question should be, "should the government own and run large corporations." Under laissez faire free market capitalism, if a company is poorly run (like GM apparently was) and is paying out too much money to its execs, then it will eventually fail and have to downsize, make changes, or go bankrupt. The free market regulates itself in that way. But, when the government bails out failing companies, then the free market doesn't have a chance. If a company can be successful and profitable, and pay such high salaries, then so be it, good for them. But to have the government take over companies and regulate them and the salaries, then it doesn't just open the door to socialism. It is socialism.
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0
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Nwambe
Oct 21, 09 6:52 PM CDT
Yeah, but this isn't laissez-faire free market capitalism, otherwise AIG would've gone under quite some time ago. This is, more or less, capitalism writ large - The government is the largest investor in the firm, and if they feel that the execs are being overpaid, then they are exercising their rights as shareholders to force the company to change business practices.
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+4
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reasonator
Oct 21, 09 7:23 PM CDT
Right. But that's my point, the government should not be shareholders in these companies. They kept the free market from running it's course, ending in the bankruptcies of the companies, when they enacted bailouts and bought controlling interest in GM and the banks.
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+2
IN RESPONSE:
DarkFrancis
Oct 21, 09 9:14 PM CDT
I don't need to be told what kind of questions I should be asking, especially in response to comment as flippant as mine. But now you mention it...if there had been no bailout, your country would be completely and utterly fucked right now. Next move is to slash the hell out of salaries at the pointy end, streamline ops costs and make sure that the gov't is paid back when the ledger hits black.
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+1

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